Which of the following statements is (are) true with respect to annuities? I. Annuities are the opposite of life insurance. II. The fundamental purpose of annuities is to replace lost income in case of premature death. A) I only B) II only C) both I and II D) neither I nor II ANSWER […]
Date: September 19th, 2020
Which of the following statements regarding the taxation of individual annuities is (are) true? I. The exclusion ratio is the percentage of the annuity income that is taxable. II. After the net cost of the annuity has been paid to the annuitant, the total annuity payment is taxable. A) I only B) II only C) […]
Date: September 19th, 2020
Charles, age 65, owns a paid-up $250,000 whole life policy on his own life. Charles is doing some estate planning and would not like this policy to be included in his gross estate for federal estate tax purposes. Which of the following statements is (are) true regarding the tax treatment of this policy? I. Charles […]
Date: September 19th, 2020
Brad funded a life annuity through installment payments. At age 60, he decided to elect an annuity settlement option and to begin to receive payments. Which of the following annuity payout options will provide Brad with the highest monthly income? A) life annuity (no refund) B) life income with payments guaranteed for 5 years C) […]
Date: September 19th, 2020
Beth purchased a $50,000 nonparticipating whole life insurance policy. The annual premium was $1,278. The cash value of the policy after 10 years will be $13,740. The future value of $1 deposited at the start of the year for 10 years, assuming 5 percent interest, is $13.207. If the premiums were invested at 5 percent […]
Date: September 19th, 2020
The National Association of Insurance Commissioners (NAIC) has drafted a “Life Insurance Policy Illustration” model law that most states have adopted. Which of the following statements concerning this model law is (are) true? I. The policy illustration must include a narrative summary describing the basic characteristics of the policy. II. The policy illustration must include […]
Date: September 19th, 2020
ABC Life Insurance Company is offering a new product. The product is a two-year term insurance policy funded by a single premium at the start of the first year. Death claims are paid at the end of the year in which death occurs. A portion of the appropriate mortality table is shown below. The first […]
Date: September 19th, 2020
According the 2001 CSO mortality table, the yearly probability of dying for a 40 year-old man is .00165. The present value of $1 one year from today, assuming a 5.5 percent interest rate, is .9479. What is the net single premium per $1,000 for a one-year term insurance policy sold to a man at age […]
Date: September 19th, 2020
The net single premium for a life insurance policy is A) the premium the insurer charges to cover the death benefit and the insurer’s expenses. B) the future value of the future death benefit. C) the present value of the future death benefit. D) the face value of the policy discounted back for the number […]
Date: September 19th, 2020
Which statement is true regarding using interest-adjusted cost data and purchasing life insurance? A) Cost indices can help to determine whether a policy should be replaced. B) The type of policy you purchase should he based solely on a cost index. C) Small variations in cost indices should be ignored. D) Cost indices should be […]
Date: September 19th, 2020
