Question

life and health insurance

3. which of the following is not a requirement of a qualified plan?

4. under the one-year term dividends option the dividends is used to buy term covers for a year with the amount of term coverage usually limited to the ?

5. which of the following is true about agents life insurance? sales advertisement in sate?

6. which is one of the factors that determines life premiums?

10. which rider allows the policyowner to increase the face amount to adjust for inflation

11.who made terminate an agent appointment?

12. in contract law. legal purpose refers to the fact that?

15.which type of insurance is characterized by premiums that are fully paid up within a state period after which no further premiums are required?

16.the difference between the face value of a life insurance policy and its cash value its the?

18.a life settlement provider must perform which of he following actions in a life settlement transaction?

20. under the fair credit reporting act all of the following are considered to be negative information except?

21.dividends are not subject to taxation because?

24. an annuity product linked to a market related rate of return is call?

25. insurance that is design to pay the balance of a loan if the insured dies before the loan has been repaid in full is?

26. what is new York state required grace period for an annuity contract?

28. which activity does not require an insurance license?

31.a policyowner may choose to have his/her life insurance policy dividends do all of the following except?

33. to sell as a sub licensee directors and officer of corporations holding life settlement licenses in new York must?

37 which of the following is not a settlement option for life policies?

38. which of the following is characteristic of level premium term life insurance?

39.term life insurance is more appropriate than whole life insurance when the?

40.a life insurance rider which reimburses expenses incurred in a convalescent or nursing home facility is?

42. which of the following exclusions may not be found in a life insurance policy?

43. if a policy owner surrenders a policy for its cash value when is a tax liability incurred?

44. the limitations expressed in limited payment policies is a limit on the number of annual premiums or the ?

45.loans may generally be obtained against the cash value of a personal life insurance policy loan proceeds?

49 all of the following statements apply to surrender of an annuity contract except?

Answer 1

3. which of the following is not a requirement of a qualified plan?

Ans-Health Insurance.

Qualified plans are designed to meet ERISA guidelines and, as such, qualify for added tax benefits on top of those received by regular retirement plans, such as IRAs. Employers deduct an allowable portion of pretax dollars from the employee's wages for investment in the qualified plan. The contributions and earnings then grow tax-deferred until withdrawal.

4. under the one-year term dividends option the dividends is used to buy term covers for a year with the amount of term coverage usually limited to the ?

Ans-Term life insurance, also known as pure life insurance, is life insurance that guarantees payment of a stated death benefit during a specified term. Once the term expires, the policyholder can either renew for another term, convert to permanent coverage, or allow the policy to terminate.

5. which of the following is true about agents life insurance? sales advertisement in sate?

Ans-Getting phone calls from life insurance agents keen on selling insurance policies has become commonplace now-a-days. At the same time, insurance agents can be helpful while buying a life insurance policy.

It needn't be mentioned that life insurance is a must for all those having financial dependants. But for buying a suitable life insurance policy with the right amount of cover one requires clarity on goals, risk profile and many other things which one is able to get only after detailed discussions with the insurance agent.

Although there is no fail-safe way to spot an insurance agent who could help you get the right policy and achieve your goals in an effective manner, some of the below-mentioned points may help you take an informed decision.

Where to search for agents
To start with, get references from your friends, relatives or colleagues about their insurance agents if they are satisfied with their services. In addition to agents providing services from their home, several agents have also set up offices and have even started advertising their business. Many life insurance agents have taken up this business as a whole-time career while others do it on a part-time basis. Agents belonging to either of such groups may be proficient in their work and prove helpful.

The first meeting with agent
On your first meeting with the agent, try to establish if he/ she is interested in making you a long-time client or is merely there for a one-off deal. Unless you are convinced on that front, do not take it forward. Remember, life insurance is primarily bought for the welfare of family members and heirs. Life insurance being a long-term contract with the premium payment spread over several years, the commitment level of the agent to service it for long plays an important role.

While you're getting information about the agent and taking a look at the agent's license, judge how you would get along with him/her in a professional relationship. After all, you're buying life insurance for the long haul, and you will have to share intimate details about your life, finances and plans with your insurance agent. And a good agent will ask you about these things before trying to sell you any policy.

Initial discussion
Just watch how the agent begins the discussion. Does he/she straightway start talking about a product? Not all products are meant for all your goals. The product recommended might be the one on which the agent's earning is higher. Unless your goals are discussed at length first, identifying the right product is illogical. Rather, the product recommendation should actually come at the end. Remember, life insurance is not about products but a solution to the problem of how to achieve your life goals.

Talking Mode
You need to talk more than the agent. Question him/her at almost every stage. Pose uncomfortable questions too. See if he/she explains insurance concepts in such a way that you are able to understand them rather than using technical stuff to impress you. Look at the confidence level and the product knowledge of the agent and see how convincing the replies are. He/she may not know the answer to every question. . So give him/her credit if he/she promises to get back to you with proper explanation to some of your queries. Life insurance is a complex product and several factors work at the same time in deciding the outcomes. Ensure that the agent is not pushing a specific product to you for buying. Mention the negatives you have heard about other insurers and then see whether the agent gives you a balanced feedback or not.

Evaluation process
An agent is supposed to go through life-need analysis before suggesting a product. Ensure that the agent is helping you identify, estimate and provide a solution for the various goals that would arise at different life stages. It's important that your insurance requirement is established taking into consideration your current age, income and family position and the agent helps you get life cover as early as possible. Get to know the claim process and the role of the agent if a claim arises.

Agent's background knowledge level
Getting an agent with at least some working experience of life insurance business helps. Although it's a life insurance business, evaluate how comfortable is the agent with the markets and his understanding about the economy. The agent's grasp of how various asset classes such as equity, debt, gold and real estate work could be a plus point. Remember, he/she may or may not have in-depth understanding of various asset classes and may not have technical knowledge of the market, but look out for any extreme view he/she might have on market conditions or asset classes. An extreme view may not be a good sign.

The short-cut
When it comes to filling up the application form not many agents would suggest filling them up by the buyer. So, if an agent is asking you to fill up the application form - be assured you are probably in safe hands. While doing so, give more importance to the 'terms and conditions' mentioned therein and the 'declaration' below which you furnish your signature.

Conclusion
Remember, the primary purpose of buying a life insurance policy is not to generate high returns; rather it is to be used as a savings and income replacement tool. It helps meet the family members' financial needs in case of one's untimely demise. An agent's role does not end just with selling a policy. He/she is also supposed to help the surviving members of the family at the time of claim. Therefore, once the agent completes the sale, make sure that he/she continues to service you, including providing periodic "insurance checkups" to ensure the policy he/she sold you a few years ago still meets your needs.

second part

A successful advertising campaign will spread the word about your products and services, attract customers and generate sales. Whether you are trying to encourage new customers to buy an existing product or launching a new service, there are many options to choose from.

The most suitable advertising option for your business will depend on your target audience and what is the most cost effective way to reach as many of them as possible, as many times as possible. The advertising option chosen should also reflect the right environment for your product or service. For example, if you know that your target market reads a particular magazine, you should advertise in that publication.

The following list is an introduction to advertising tactics that you could use. Remember, you can always be creative in your advertising to get noticed (within advertising regulations).

Newspaper

Newspaper advertising can promote your business to a wide range of customers. Display advertisements are placed throughout the paper, while classified listings are under subject headings in a specific section.

You may find that a combination of advertising in your state/metropolitan newspaper and your local paper gives you the best results.

Magazine

Advertising in a specialist magazine can reach your target market quickly and easily. Readers (your potential customers) tend to read magazines at their leisure and keep them for longer, giving your advertisement multiple chances to attract attention. Magazines generally serve consumers (by interest group e.g. women) and trade (industry/business type e.g. hospitality).

If your products need to be displayed in colour then glossy advertisements in a magazine can be ideal - although they are generally more expensive than newspaper advertisements.

Magazines do not usually serve a small area such as a specific town. If your target market is only a small percentage of the circulation, then advertising may not be cost-effective.

Radio

Advertising on the radio is a great way to reach your target audience. If your target market listens to a particular station, then regular advertising can attract new customers.

However, sound has its limitations. Listeners can find it difficult to remember what they have heard and sometimes the impact of radio advertising is lost. The best way to overcome this is to repeat your message regularly - which increases your costs significantly. If you cannot afford to play your advertisement regularly, you may find that radio advertising does not generate strong results.

Television

Television has an extensive reach and advertising this way is ideal if you cater to a large market in a large area. Television advertisements have the advantage of sight, sound, movement and colour to persuade a customer to buy from you. They are particularly useful if you need to demonstrate how your product or service works.

Producing a television advertisement and then buying an advertising slot is generally expensive. Advertising is sold in units (e.g. 20, 30, 60 seconds) and costs vary according to:

• the time slot
• the television program
• whether it is metro or regional
• if you want to buy spots on multiple networks.

Directories

Directories list businesses by name or category (e.g. Yellow Pages phone directories). Customers who refer to directories have often already made up their mind to buy - they just need to decide who to buy from.

The major advantage of online directories over print directories is that if you change your business name, address or telephone number, you can easily keep it up to date in the directory. You can also add new services or information about your business.

If your target market uses print and online directories, it may be useful to advertise in both, although print directories are being used less.

Outdoor and transit

There are many ways to advertise outside and on-the-go. Outdoor billboards can be signs by the road or hoardings at sport stadiums. Transit advertising can be posters on buses, taxis and bicycles. Large billboards can get your message across with a big impact. If the same customers pass your billboard every day as they travel to work, you are likely to be the first business they think of when they want to buy a product.

Even the largest of billboards usually contain a limited amount of information; otherwise, they can be difficult to read. Including your website address makes it easy for customers to follow up and find out more about your business. Outdoor advertising can be very expensive especially for prime locations and supersite billboards.

Direct mail, catalogues and leaflets

Direct mail means writing to customers directly. The more precise your mailing list or distribution area, the more of your target market you will reach. A direct mail approach is more personal, as you can select your audience and plan the timing to suit your business. A cost effective form of direct mail is to send your newsletters or flyers electronically to an email database. Find out more about direct mail.

Catalogues, brochures and leaflets can also be distributed to your target area. Including a brochure with your direct mail is a great way to give an interested customer more information about your products and services. Learn more about leaflet marketing using letterbox drops and handouts.

Online

Being on the internet can be a cost-effective way to attract new customers. You can reach a global audience at a low cost. Many customers research businesses online before deciding whom to buy from.

A well-designed website can entice customers to buy from you. There are a number of ways you can promote your business online via paid advertising or to improve your search engine rankings. Learn more about doing business online.

Other ways to advertise your business online include promoting your products or services on social media sites, blogs and search engines and other websites that your target audience visits. Find out more about social media.

6. which is one of the factors that determines life premiums?

Ans-

1.Age

Age is the prime factor in deciding the premium of the life insurance policy. The reason being is a young person’s body is less likely to contract diseases. Also, a young person is more likely to choose a longer duration policy in which he/she will be paying more number of premiums than compared to someone older. Therefore, the premium amount is less if you are buying an insurance at a young age than compared to older age where premium calculation is always high as risk to insurance company is more and duration of the policy term is less.

2.Gender

Although it is said all men and woman are equal but for insurance company’s woman live longer than men and pose a lesser risk of claim. Hence, premiums for females is slightly lesser than compared to males falling in same criteria.

3. Smoking and drinking

We all are aware smoking and drinking are injurious to health and can increase the risk of contracting life threatening diseases. A person who smokes or drinks alcohol has to pay a higher premium in the range of 40% to 60% than a non-smoker or drinker. Hence, smoking and drinking is not only injurious to your health but also to your wealth.

4. Policy Term

The policy term plays an important role in determining the premium. The longer the duration, cheaper will be the premium. Hence, long term polices are cheaper then short term policies.

5. Platform you are using to buy the policy

Premium also depends on the platform you are using to buy the policy. Today due to internet revolution and easy access of internet on smart phones, all major insurance companies have an online presence enabling easy purchase of policies online. The cost of selling policies online is also less as it involves less administration cost which helps in cutting down the premium. Offline platform involves lot of intermediary cost such as commission, paper work, administration which adds up to the premium payable.

6. Premium payment frequency

You can choose the frequency of premium payment as monthly, quarterly, semi-annually and annually. However, the insurance companies charge higher premium based on the frequency of payment selected. For them if you choose monthly payment then the cost of collection, administration, paper work will be more. This cost is added to the premium payment. Hence, if you select annual payment mode then you pay less premium and also the insurance company gets the fund for the whole year in one shot.

7. Your current health status

Insurance companies ask you to go through medical tests to evaluate your current health situation. Based on your medical test results insurance companies decide on the premium amount. So, if you are deemed medically fit it will help in lowering your premium amount calculation. For example

• Obesity: Obesity increases the chances of people contracting various diseases such as diabetes, heart problem, blood pressure etc. These diseases can pose a higher risk causing death and as a result the premium gets high.

8. Occupation

Certain occupations are considered more dangerous like shipping, industry workers, miners, fisherman are expected to pay more premium than people working in an office job where the work environment is relatively safe. How much impact each of the above factors has on your life insurance rates also depends on how the insurance company rates each factor. As every case of premium calculation is taken on an individual basis, it is prudent that before buying a life insurance policy you should compare the quotes from different insurers to get the ideal life insurance deal.

10. which rider allows the policy owner to increase the face amount to adjust for inflation

Ans-

11.who made terminate an agent appointment?

Ans-

Insurers must notify the Commissioner within 30 days of the termination date. Prior to or within 15 days of filing such notice, the insurer shall provide the agent written notice. Refer to s. Ins 6.57 (2), Wis. Adm. Code.

Insurers must submit agent terminations electronically through www.nipr.com or an NIPR authorized business partner.

Insurers are required to submit documentation if the agent appointment was terminated for cause. This documentation need not prove violations but should include situations where possible violations exist.

The insurer must report a termination if alleged to have violated one of the following [s. Ins 6.59 (5) (d), Wis. Adm. Code]:

• Providing incorrect, misleading, incomplete or materially untrue information in the license application.
• Violating any insurance laws, or violating any regulation, subpoena or order of the insurance commissioner or of another state's insurance commissioner.
• Obtaining or attempting to obtain a license through misrepresentation or fraud.
• Improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business.
• Intentionally misrepresenting the terms of an actual or proposed insurance contract or application for insurance.
• Having been convicted of a felony or misdemeanor substantially related to the circumstances of holding an insurance license.
• Having admitted or been found to have committed any insurance unfair trade practice or fraud.
• Using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business in this state or elsewhere.
• Having an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory.
• Forging another's name to an application for insurance or to any document related to an insurance transaction.
• Improperly using notes or any other reference material to complete an examination for an insurance license.
• Knowingly accepting insurance business from an individual who is not licensed.
• Failing to comply with an administrative or court order imposing a child support obligation.
• Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

Insurer will also be required to submit documentation within 30 days if a complaint is received alleging the following [s. Ins 6.57 (2) (b), Wis. Adm. Code]:

• Company Indebtedness
• Forgery
• Altering Policies
• Fraud
• Misappropriation
• Misrepresentation
• Failure to promptly Submit Applications or Premiums
• Poor Policyholder Service Involving the Agent Being Terminated

12. in contract law. legal purpose refers to the fact that?

Ans-This means that the object of the contract and the reason the parties enter into the agreement must be legal. A contract in which one party agrees to commit murder for money would be unenforceable in court because the object or purpose of thecontract is not legal.

15.which type of insurance is characterized by premiums that are fully paid up within a state period after which no further premiums are required?

Ans-Whole Life Insurance.

16.the difference between the face value of a life insurance policy and its cash value its the?

Ans-

When you buy a permanent life insurance policy such as a whole, universal, or variable life policy, you may discover that the policy has two vales, the face value and the cash value. These are not variations of the same value, but are actually two different accounts associated with the policy.

Face value is the amount you purchase the policy for, and is used for all life insurance policies, even term life. Regardless of the performance of the policy investments, the face value of the policy will not change. For example, if you purchase a whole life policy for $200K, your named beneficiaries will receive the face value after you pass away even if the investments of the policy have gone bust.

The cash value associated with a policy behaves much differently. The policy begins with a $0 cash value, and that amount increases over time. The way it works is that a portion of each premium goes into the cash value, and then the accumulated amount earns interest on the value as well. When the policy investments perform well, the cash value can become quite large, but poorly performing investments can result in the cash almost completely disappearing.

If you can borrow against your life insurance policy, it is the cash value that you borrow against, not the face value. You still have to pay back the loan and interest charges, but there is no credit check required to get a loan against a life insurance policy. If you pass away before the loan is repaid, the balance owed will be subtracted before the policy pays out to your chosen beneficiaries. In some rare cases, the outstanding balance may exceed the cash value of the policy, in which case the difference is subtracted from the face value when the policy comes up for settlement.

18.a life settlement provider must perform which of he following actions in a life settlement transaction?

Ans-A company to which a life insurance policy holder sells his/her policy in exchange for a lump sum. The situationoccurs when the policy's fair market value exceeds the cash surrender value that the insurer offers. The viaticalsettlement company must abide by applicable regulations, which, in the U.S., are set by individual states. The viaticalsettlement company becomes the policy's new beneficiary, is responsible for maintaining premiums, and, upon thedeath of the insured person, receives the benefit. The secondary market for life insurance began growing in the lastpart of the 20th century. The viatical settlement company is speculating on how long the insured person will live;indeed, it is in the company's financial interest for the insured person to die as soon as possible. A viatical settlementcompany is also called a life settlement provider.

20. under the fair credit reporting act all of the following are considered to be negative information except?

Ans-(a) Except as authorized under subsection (b), no consumer reporting agency may make any consumer report containing any of the following items of information:

• (1) cases under title 11 of the United States Code or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.

  (2) Suits and judgments which, from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.

  (3) Paid tax liens which, from date of payment, antedate the report by more than seven years.

  (4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.

  (5) Records of arrest, indictment, or conviction of crime which, from date of disposition, release, or parole, antedate the report by more than seven years.

  (6) Any other adverse item of information which antedates the report by more than seven years.

(b) The provisions of subsection (a) are not applicable in the case of any consumer credit report to be used in connection with--

(1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $ 50,000 or more;

(2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $ 50,000 or more; or

(3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $ 20,000, or more.

21.dividends are not subject to taxation because?

Ans-Retirement planning can be a tricky thing for most investors. So many terms are tossed around, one can easily get confused as to what is really being said. The term "nontaxable dividend" can be one of those terms that people get confused over. It's a fancy way of saying that any earnings on an investment are tax deferred until the investment fund is used.

Sample Retirement Account

Looking at a sample retirement account invested in the stock market, the investor places money into the stock market to earn dividends. When the investment earns dividends, the amount earned is placed back into the account for future earnings. When the dividends are paid to the investor, they are considered nontaxable dividends. This is due to the account being used for retirement investment. Once the investor begins drawing payments from the retirement account, taxes are paid then.

Tax Deferred

Tax-deferred investments are a popular way for investors to plan for their retirement. The deferment allows retirement accounts to be funded with pretax money. This means more money is allowed to grow in the retirement account. Once the investor reaches the age to draw from the account, traditionally 59 1/2, the account is now taxed as income at the current income tax rate. These rates fluctuate, so proper planning is essential when beginning a retirement portfolio account.

24. an annuity product linked to a market related rate of return is call?

Ans-

Why an Alert on Equity-Indexed Annuities?

Sales of equity-indexed annuities (EIAs)—also known as "fixed-indexed insurance products" and "indexed annuities"—have grown considerably in recent years. Although one insurance company at one time included the word "simple" in the name of its product, EIAs are anything but easy to understand. One of the most confusing features of an EIA is the method used to calculate the gain in the index to which the annuity is linked. To make matters worse, there is not one, but several different indexing methods. Because of the variety and complexity of the methods used to credit interest, investors will find it difficult to compare one EIA to another.

Before you buy an EIA, you should understand the various features of this investment and be prepared to ask your insurance agent, broker, financial planner or other financial professional lots of questions about whether an EIA is right for you.

What is an Annuity?

An annuity is a contract between you and an insurance company in which the company promises to make periodic payments to you, starting immediately or at some future time. If the payments are delayed to the future, you have a deferred annuity. If the payments start immediately, you have an immediate annuity. You buy the annuity either with a single payment or a series of payments called premiums.

Annuities come in two types: fixed and variable. With a fixed annuity, the insurance company guarantees both the rate of return and the payout. As its name implies, a variable annuity's rate of return is not stable, but varies with the performance of the stock, bond and money market investment options that you choose. There is no guarantee that you will earn any return on your investment and there is a risk that you will lose money. Unlike fixed contracts, variable annuities are securities registered with the Securities and Exchange Commission (SEC). To learn more about variable annuities, read our Investor Alert, Should You Exchange Your Variable Annuity?

What is an Equity-Indexed Annuity?

EIAs are complex financial instruments that have characteristics of both fixed and variable annuities. Their return varies more than a fixed annuity, but not as much as a variable annuity. So EIAs give you more risk (but more potential return) than a fixed annuity but less risk (and less potential return) than a variable annuity.

EIAs offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, EIAs have less market risk than variable annuities. EIAs also have the potential to earn returns better than traditional fixed annuities when the stock market is rising.

What is the Guaranteed Minimum Return?

When EIAs were first sold in the mid-1990s, the guaranteed minimum return was typically 90 percent of the premium paid at a 3 percent annual interest rate. More recently, in part because of changes to state insurance laws, the guaranteed minimum return is typically at least 87.5 percent of the premium paid at 1 to 3 percent interest. However, if you surrender your EIA early, you may have to pay a significant surrender charge and a 10 percent tax penalty that will reduce or eliminate any return.

How good is this guarantee?

Your guaranteed return is only as good as the insurance company that gives it. While it is not a common occurrence that a life insurance company is unable to meet its obligations, it happens. There are several private companies that rate an insurance company's financial strength. Information about these firms can be found on the SEC's website.

What is a market index?

A market index tracks the performance of a specific group of stocks representing a particular segment of the market, or in some cases an entire market. For example, the S&P 500 Composite Stock Price Index is an index of 500 stocks intended to be representative of a broad segment of the market. There are indexes for almost every conceivable sector of the stock market. Most EIAs are based on the S&P 500, but other indexes also are used. Some EIAs even allow investors to select one or more indexes.

How is an EIA's index-linked interest rate computed?

The index-linked gain depends on the particular combination of indexing features that an EIA uses. The most common indexing features are listed below. To fully understand an EIA, make sure you not only understand each feature, but also how the features work together since these features can dramatically impact the return on your investment.

• Participation Rates. A participation rate determines how much of the gain in the index will be credited to the annuity. For example, the insurance company may set the participation rate at 80 percent, which means the annuity would only be credited with 80 percent of the gain experienced by the index.
• Spread/Margin/Asset Fee. Some EIAs use a spread, margin or asset fee in addition to, or instead of, a participation rate. This percentage will be subtracted from any gain in the index linked to the annuity. For example, if the index gained 10 percent and the spread/margin/asset fee is 3.5 percent, then the gain in the annuity would be only 6.5 percent.
• Interest Rate Caps. Some EIAs may put a cap or upper limit on your return. This cap rate is generally stated as a percentage. This is the maximum rate of interest the annuity will earn. For example, if the index linked to the annuity gained 10 percent and the cap rate was 8 percent, then the gain in the annuity would be 8 percent.

25. insurance that is design to pay the balance of a loan if the insured dies before the loan has been repaid in full is?

Ans-

26. what is new York state required grace period for an annuity contract?

Ans-

Annuities are insurance contracts that provide you with monthly income benefits. Insurance firms convert your purchase premiums into an income stream through a process known as annuitization. You cannot reverse the annuitization process; however, state laws require annuity contracts to include a get-out clause, known as a free look provision, during which you can cancel your contract.

Cancellation

Deferred annuity contracts typically have terms that last between five and 25 years. You can surrender the contract prematurely, but penalty fees for premature redemption can top 20 percent of the contract value. You can buy an annuity with tax-deferred or previously taxed funds. However, the funds inside your annuity grow on a tax-deferred basis, and your withdrawals are taxable. You also incur a 10-percent tax penalty if you make a withdrawal prior to the age of 59 1/2. An annuity free look provision may enable you to avoid surrender fees and possibly some of the tax penalties.

Free Look

When you buy an immediate annuity, the annuitization process occurs shortly after you buy your contract. With a deferred annuity, your funds are invested for a number of years in mutual funds or fixed interest accounts after which annuitization occurs. Your annuity contract takes effect on the day that you sign the contract. In most states, you can generally get a refund and cancel the contract at any point during the 10 days immediately following the purchase date. The state of California extends the cancellation grace period to 30 days for seniors. In other states such as Minnesota and North Carolina, the free look period on a new contract lasts for a minimum of 10 days regardless of your age.

Exchange

When an annuity contract reaches maturity, you can protect the tax-deferred status of your investment by rolling the cash into another annuity contract. Contract exchanges are subject to the same type of free look provisions as new contract purchases. Most states provide you with a minimum 10-day free look period on exchanges, although insurance firms may provide you with a longer time frame. In Nevada, you have a grace period of 30 days or more on exchanges, while the free look period on new contract purchases lasts just 10 days. Other states, such as Minnesota, have the same 10-day grace period for both new purchases and exchanges.

Other Withdrawals

Generally, annuity withdrawals beyond the grace period are subject to surrender penalties. However, many contracts include a clause enabling you to make annual penalty-free withdrawals amounting to up to 10 percent of your contract value. Additionally, some contracts include a bailout clause through which you can withdrew your funds penalty-free at any point during the contract term. You can activate the bailout clause if the interest rate on your contract ever falls below a predetermined minimum.

28. which activity does not require an insurance license?

Ans-

The information on this page is intended to provide a quick overview of when a license may or may not be required. It does not encompass all circumstances and is not meant as substitute for legal advice. Please refer to Chapter 12 of the Michigan Insurance Code, 1956 PA 218, for complete information. The Insurance Code is the prevailing authority as to when a license is required. Questions may be directed to the Department’s Insurance Licensing Section toll free at 877-999-6442.

If you are soliciting, negotiating or selling insurance you are required to be licensed as an insurance producer (agent).

MCL 500.1201(m)
“Solicit” means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.

MCL 500.1201(k)
“Negotiate” means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.

MCL 500.1201(l)
“Sell” means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.

31.a policyowner may choose to have his/her life insurance policy dividends do all of the following except?

Ans-Change of Occupation.

33. to sell as a sub licensee directors and officer of corporations holding life settlement licenses in new York must?

Ans-

37 which of the following is not a settlement option for life policies?

Ans-

We’ll cover this one first because many people don’t know that if they have a permanent life insurance policy there are several ways to derive income from your life insurance policy while still alive.

These fall into 2 categories known as:

• Dividend Options
• Non-Forfeiture Options

Life Insurance Settlement to Cease Paying Premiums

You have 3 options (applies to Permanent Life Insurance policies only) to choose from when you want a life insurance settlement when you want to stop paying the premiums including:

• Cash Surrender – You can opt to receive any outstanding cash value when you choose to surrender the policy
• Reduce Your Paid–Up Option – Means that you can use the cash value you have accumulated to buy a single-premium policy (applies to Whole Life) but for a lesser amount than the policy you originally purchased
• Extended Term Option – Means you use the cash value to buy a Term life insurance policy equal to your permanent policy’s original value, but the coverage only lasts to the length of the term

Life Settlement Options

A life insurance life settlement option simply means that you sell your life insurance to a third party.

This approach is especially popular with seniors these days and there are 2 approaches you can take including:

• Selling your policy to a family member
• Selling Your policy to a Life Settlement Broker
• Selling you policy to a Life Settlement Company
• Sell on your policy on your own

However, before you do so you would be wise to seek some financial advicebecause there are a number of pitfalls that can occur so you should be aware of the following:

• Most sellers only receive as little as between 13 – 21% of the value of the policy
• All policies apply including term insurance
• Brokers and other purchasers take a commission as high as around 9% to as high as 30%
• Most brokers will only consider people who are over the age 65 or will only consider those with a chronic or terminal illness, and have policies worth at least $100,000
• Selling you policy can have tax implications
• Selling your policy may affect your ability to qualify for government sponsored programs
• You lose control of your death benefits
• The buyer has access to all your medical reports including current ones

So, be very cautious about taking this approach as it might be more advantageous to simply surrender the policy and take the cash value of the policy instead (Applies to permanent life insurance policies only as term policies have no cash value when surrendered).

Life Insurance Settlement Options When You Die

Choosing a life insurance settlement option for when you die should be approached and considered carefully. It all depends on what you want to achieve and how you want to provide for your family.

Let’s look at the various settlement options available.

Life Insurance Policy Pay-Out Options

Your choices include either:

• Lump Sum Option
• Income or Annuity

38. which of the following is characteristic of level premium term life insurance?

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Level term life insurance, like all term policies, lasts for a set period of time before it expires. The word “level” is what’s key in the definition: The premium rate for the policy stays the same, or level, for the entire life of the policy. The death benefit also stays the same.

When people mention term life insurance generically, they usually mean level term insurance. It’s the most common form because of its simplicity; the policyholder doesn’t have to worry about the premiums varying from month to month or year to year. They don’t have to worry about the death benefit changing from the policy’s inception to its expiration, and there is no cash value or fees to take into account.

For anyone looking for a basic financial safety net to ensure that their loved ones are secure in the event of the death of the primary breadwinner, level term life insurance is the best option. It’s also the most common policy offered by life insurance companies, so it’s easy to compare quotes and get the best rate

39.term life insurance is more appropriate than whole life insurance when the?

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40.a life insurance rider which reimburses expenses incurred in a convalescent or nursing home facility is?

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42. which of the following exclusions may not be found in a life insurance policy?

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Life insurance is essentially a contract between two parties – the life insurer and the life assured – wherein the former provides life cover to the latter in exchange for a cost known as premiums. In case the life insured passes away before the stipulated policy expiry date, their nominee or beneficiary will be entitled to receive the sum assured payout. However, life insurance is, after all, a business where profits and losses can make or break a company. Every insurer, in order to minimize their losses, has laid down a list of exclusions which are basically events/circumstances, and their consequences which will not be covered under the policy. If an insured dies under unclear circumstances, then it is the duty of the insurer to investigate the cause of death in detail to rule out foul play and also determine whether the death was caused due to an event or circumstance which the policy doesn’t cover.

For instance, a person has taken a life insurance policy right before going on a vacation where they’ll be participating in adventure sports like skydiving. In case the insured dies due to a skydiving accident, their nominee will not be entitled to any benefit, as this particular event or its consequence is not covered under the life insurance policy. Similarly, there are several other instances or events which are not covered by life insurance. Let us find out what these are.

Life-threatening activity – You may have noticed that insurance policies mention dangerous or adventure activities under exclusions. This is because of the high life risk that these activities are associated with, as a result of which they will not be covered. This exclusion will usually include adventure sports like skydiving, paragliding, rock climbing, scuba diving, vehicle racing, hang gliding, and other such adrenaline-pumping adventure sports.

Maternity-related – Usually, life insurance policies may not cover death caused due to pregnancy or pregnancy-related complications.

Pre-existing disease – Another standard exclusion in life insurance is death due to a pre-existing disease. Pre-existing diseases are diseases which the insured has been suffering from at the time of applying for the policy, or prior to cover commencement. These are usually not covered by life insurance.

Aviation-related loss – Most often, death in an air crash wherein the insured was traveling on a private airplane, will not be covered by an insurance policy. However, if the insured has died while traveling with a commercial airline which follows a set schedule and routes, the insurer may pay out the death benefit.

Participation in criminal/illegal acts – No insurance policy, sold by any the insurer, will provide cover for the risk posed due to participation in illegal/criminal/unlawful activities. This is one of the standard exclusions of every life insurance policy. This can include activities like driving under the influence of alcohol, consumption of intoxicants like drugs or alcohol, injury or death caused due to a car accident wherein the insured was not wearing a seat belt or was speeding, participation in illegal protests, etc. no insurer will pay or entertain a claim wherein the insured’s death has been caused due to an illegal or unlawful activity.

War/war-related acts – This is another standard exclusion in a life insurance policy which may be far less common in older days than it is now. As per this clause, if the insured has died due to a war act or any war-related activity, then the death benefit will not be paid out.

Suicide – Death due to suicide is an event which most life insurers will not cover, especially if the same has taken place within a period of 2 years, starting from the policy commencement date. In such cases, the death benefit might not be paid at all, but depending on the policy details, the nominee may get equal to or more than 80% of the total premiums paid for the policy till death. This refund of premium will be provided based on the terms and conditions of the policy.

Speaking of exclusion in life insurance policies, it is important to note that not all life insurance policies may have similar exclusions. Because of this, it is important that you check with your insurer and also go through the policy document in detail to find out what your policy will not provide cover for. Some other instances where a claim can be denied are as follows.

• Incorrect/misrepresented information – At the time of applying for a life insurance policy, all applicants must ensure that they do not misrepresent or misstate any facts or information regarding themselves. If the insurer happens to find any discrepancy in the information provided by you at the time of application, your policy can be canceled altogether.
• Giving incorrect age-related details – At the time of buying the policy, do not lie about your actual age. If you misstate your age, then your insurer is under every right to deny the death claim when it is raised.

• Contestability period – This brief period, which usually set at 2 years for life insurance providers in India, is a time during which the insurer can thoroughly investigate death claims and even deny them. This period is basically a time when the insurer will review the policy’s underwriting and investigate whether the information provided by the applicant is correct, complete and true. In case of any discrepancy, they can withhold the death claim payout.

Considering all that has been mentioned above, one can draw the conclusion that insurance is not something that must b taken lightly. It is a tool which will ensure the financial safety and well-being of your loved ones especially at a time of misfortune. Therefore, it is important for every buyer to read their policy document carefully and understand what it offers thoroughly.

43. if a policy owner surrenders a policy for its cash value when is a tax liability incurred?

Ans-Surrender value is the sum of money an insurance company will pay to the policyholder or annuity holder in the event of his policy being voluntarily terminated before its maturity or the insured event occurring. This cash value is the savings component of most permanent life insurance policies, particularly whole life insurance policies. This is also known as 'cash value', 'surrender value' and 'policyholder's equity'.

Surrender value is the amount payable to the policyholder should he decide to discontinue the policy and encash it. It is payable only after three full years' premiums have been paid to the insurance company. Moreover, if it is a participating policy, the bonus gets attached to it. Surrender of policy is not recommended since the surrender value will always be proportionately lower.

If you decide to go in for another insurance policy at this stage, it will come at a much higher premium because your age will have advanced since taking the earlier policy. Therefore, retention of earlier policies and continuing all policies without allowing them to lapse is the best strategy.

Surrender value is what an insurance company will pay an insured, after charges are deducted, if he terminates or surrenders the policy before the original maturity date. The life cover provided by a life insurance policy ends with its surrender as it effects a termination of the contract between the insured and the insurer. On surrender, the insured basically gets the fund value of his investments minus the charges that the insurer levies on account of premature termination.

Surrender values exist only in investment-cum-insurance policies like endowment plan, money back plan and unit-linked insurance plan (ULIP) since they originate from the investments of the insured. Some ULIPs can be surrendered after one year but the surrender value is payable only after three years as investments in ULIPs are locked-in for this period. Single premium policies can be surrendered after one year.

44. the limitations expressed in limited payment policies is a limit on the number of annual premiums or the ?

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45.loans may generally be obtained against the cash value of a personal life insurance policy loan proceeds?

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49 all of the following statements apply to surrender of an annuity contract except?