Exam Actual Exam Latest Questions

Life Insurance and Health Insurance Exam Actual Exam Latest Questions and Correct Answers Rated A+

Section 529 Plans -ANSWER-- state provided

• can be funded by after tax dollars
• can pay prepaid tuition
• All earnings exempt from federal taxes
• If withdrawn for unqualified withdrawl, 10% penalty

Roth IRA -ANSWER-private retirement plan that taxes income before it is saved, but which does not tax interest on that income when funds are used upon retirement Distributions don't have to start before 70.5

401(k) plan -ANSWER-Elective deferral plan that allows employee to reduce compensation by a stated percentage on a tax deductible/ tax differed basis; often the employer matches the employee contributions

Simplified Employee Pension (SEP) -ANSWER-A qualified plan in which a smaller employer contributes specified amounts directly into IRA accounts on behalf of eligible employees

403(b) plan -ANSWER-An elective deferral plan for employees of organizations such as school systems, churches, and hospitals

Keogh Plan -ANSWER-Retirement plan for self-employed individual and their qualified employees

Rollover -ANSWER-Tax free withdrawal of cash or other assets from one retirement program and its reinvestment in another program. It is not considered income and it is not taxable until a later withdrawal.Has to be completed in 60 days

Transfer -ANSWER-When amounts of a qualified plan are transferred to another qualified plan

Employee Retirement Income Security Act (ERISA) -ANSWER- Federal law that increased the responsibility of pension plan trustees to protect retirees, established certain rights related to vesting and portability, and created the Pension Benefit Guarantee Corporation

profit-sharing plan -ANSWER-a benefit whereby employees may share in the profits of the business

Catch-up Contributions -ANSWER--for those aged 50 or older -additional $1,000 annually

**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) - established the catch up provisions**

Rollover time frame -ANSWER-60 days

Keogh Plan -ANSWER-A federally-approved, tax-deferred savings program for self-employed people, allowing them to set money aside for their retirement.

Annuity Period -ANSWER-the payout period of an annuity

Flexible Premium Annuity -ANSWER-allows the owner to vary the premium payments

Deferred Annuity -ANSWER-An annuity that starts sometime in the future.

Variable Annuity -ANSWER-Annuity that has a varying rate of return based on the mutual funds in which one has invested

Gramm-Leach-Bliley Act -ANSWER-requires financial institutions to ensure the security and confidentiality of customer data

Certificate of Insurance (COI) -ANSWER-proof that the insured has insurance

Market conduct -ANSWER-refers to the marketing practices of insurers and agents that involve interaction with insureds, claimants, or consumers

expense loading -ANSWER-the amount needed to pay all expenses, including commissions, general administrative expenses, state premium taxes, acquisition expenses, and an allowance for contingencies and profit

Straight Life Annuity -ANSWER-The payout option that will guarantee an annuity payment for the remainder of an individual's life. This option typically provides the largest monthly payment.

Refund Life Annuity -ANSWER-Provides annuity payments for the annuitant's lifetime with the guarantee that in no event will total income be less than the purchase price of the contract. If the annuitant dies before receiving this amount, the difference is paid to a named beneficiary either as a cash refund or in installments.

convertible term policy

Aleatory Contract -ANSWER-a contract where the values exchanged may not be equal but depend on an uncertain event

Insurance Dividends -ANSWER-Considered to be a return of overpaid premiums and is not taxable. You can get the dividend in the form of

CRAPPO

• Cash
• reduction of premium
• allow the dividends to accumulate at interest (the money earned on

the returned dividend is taxable as ordinary income

• Paid up permament addition - you can purchase additional whole life

policy and the price will change depending on dividend and age -paid up option - pay up policy earlier than expected

• one year term - use dividends to purchase additional term insurance

for 1 year (after 1 year, the term expires)

insurance benefit -ANSWER-Advantage, privilege, right, or financial reimbursement

Insurance Considerations -ANSWER-The easiest way to protect yourself and your organization from the legal liability and financial loss associated with environmental safety risks is through insurance.Coverage by insurance allows the facility to transfer the potentially devastating financial risk of a future loss for the cost certainty of a monthly or yearly payment (i.e., premium).

Adverse Selection -ANSWER-A high-risk person benefits more from insurance, so is more likely to purchase it.