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MA LIFE INSURANCE EXAM STUDY GUIDE EXAM
QUESTIONS
Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -60 Questions and Answers
-Format: Multiple-choice / Flashcard
Question 1: Carl is owner and insured of a life insurance policy. If he were to die without having selected a settlement option, which of the following option(s) is available to the beneficiary?A.) The beneficiary must leave the cash value with the insurer to accumulate interest for a period specified in the policy.B.) The beneficiary must choose a settlement option that does not include a life contingency.C.) The beneficiary may choose from all settlement options that would have been available to Carl.D.) The beneficiary must take the cash value as a lump-sum payment only.
Answer:
C.) Question 2: Using the "needs approach" to determining lump-sum cash needs at death, a
producer should consider all the following expenses EXCEPT:
A.) estate taxes and estate settlement costs B.) the insured's debt C.) future food, clothing, and housing expenses D.) final medical and funeral expenses
Answer:
C.) FOOD, CLOTHING, HOUSING EXPENSES
Question 3: All of the following statements about annuities are correct, EXCEPT: A.) An annuity converts a sum of money into a series of income payments.B.) The primary purpose of an annuity is to guarantee the accumulation of money over time.C.) Annuities are not life insurance.D.) Annuities are sold by life insurance agents and are issued by life insurance companies.
Answer:
B.) Question 4: Which of the following does not constitute unfair discrimination with respect to life insurance?A.) refusing the application of a blind person B.) requiring an applicant to take a genetic test C.) limiting coverage for a victim of domestic violence D.) charging a higher premium on the basis of a genetic condition
Answer:
D.) CHARGING HIGHER PREMIUM ON BASIS OF GENETIC CONDITION
Question 5: How long may an insurer defer payment of a cash surrender benefit from an annuity?A.) 6 months B.) 3 months C.) 12 months D.) 1 month
Answer:
A.) SIX MONTHS
Question 6: Life insurance can provide both death benefits and living benefits. All the following
are death benefit-related reasons for owning life insurance EXCEPT:
A.) to create an estate B.) to supplement one's retirement income C.) to preserve an estate D.) to protect survivors against the income lost when an insured dies
Answer:
B.) TO SUPPLEMENT RETIREMENT INCOME
Question 7: Which of the following can be funded with a single premium payment, a series of fixed premium payments, or flexible premium payments?A.) retirement annuities B.) single-premium immediate annuities C.) immediate annuities D.) deferred annuities
Answer:
D.) DEFERRED ANNUITIES
Question 8: In accordance with Section 1035 of the Tax Code, which of the following exchanges is permitted on a tax-free basis?A.) a market-value adjusted annuity for a whole life insurance policy B.) a variable annuity for a variable life insurance policy C.) a deferred market-value adjusted annuity for an immediate variable annuity D.) an equity-indexed annuity for an equity-indexed life insurance policy
Answer:
C.) DEFERRED MVA FOR IMMEDIATE VA
Question 9: All the following statements regarding Section 529 prepaid tuition plans are correct
EXCEPT:
A.) Prepaid tuition plans let parents "prepay" a child's tuition at participating in-state public colleges and universities.B.) Prepaid tuition plans can be used to cover elementary and secondary school tuitions as well as college tuitions.C.) Prepaid tuition plans cover tuition and mandatory fees only (not room and board or books).D.) Prepaid tuition plans typically limit a child's choice of colleges to in-state schools.
Answer:
B.) PREPAID PLANS CANNOT BE USED TO COVER ELEMENTARY AND SECONDARY SCHOOLS
Question 10: All the following statements regarding the "spendthrift clause" of a life insurance
policy are correct EXCEPT:
A.) The spendthrift clause keeps the beneficiary from changing the settlement option chosen by the policyowner.B.) The spendthrift clause keeps the beneficiary's creditors from forcing the insurer to pay them the death benefit.C.) The spendthrift clause protects death benefits only until they are paid to the beneficiary, at which point they are no longer protected.D.) The spendthrift clause keeps beneficiaries from claiming any death benefits until the insurer checks their personal and business credit histories.
Answer:
D.) Question 11: In accordance with Section 1035 of the Tax Code, all the following exchanges are
permitted on a tax-free basis EXCEPT:
A.) A deferred annuity exchanged for a whole life insurance policy.B.) A deferred variable annuity exchanged for an immediate fixed annuity.C.) A variable life insurance policy exchanged for a deferred fixed annuity.
D.) A universal life insurance policy exchanged for a whole life insurance policy.
Answer:
DEFERRED ANNUITY EXCHANGED FOR A WHOLE LIFE INSURANCE POLICY.
Question 12: Which of the following correctly identifies qualified educational expenses that can be covered under a Section 529 PREPAID tuition plan?A.) tuition only B.) tuition, mandatory fees, and room and board only C.) tuition and mandatory fees only D.) tuition, mandatory fees, room and board, and books
Answer:
C.) TUITION AD MANDATORY FEES ONLY
Question 13: Under the "bring-back rule," the death benefit of a life insurance policy that was transferred to a third party by the insured is included in the insured's estate if made within A.) 5 years prior to the insured's death B.) 7 years prior to the insured's death C.) 10 years prior to the insured's death D.) 3 years prior to the insured's death
Answer:
D.) 3 YEARS PRIOR TO INSURED'S DEATH
Question 14: What is the maximum amount of time most states allow insurers to delay paying cash surrender values?A.) one week B.) nine months C.) one month D.) six months
Answer:
D.) 6 MONTHS
Question 15: Pam is a vice president employed by Gulf, Inc., where she has $300,000 in coverage under the company's noncontributory group life insurance plan. What portion of that coverage is taxable to Pam?
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