Kentucky Life Insurance State Exam Practice Questions with Answers (new)
Question : The premiums paid by an employer for his
employee's group life insurance are usually considered to be
CORRECT ANSWER : Tax-deductible to the employer
Question : Which of these is NOT considered to be a cost
connected with an individual's death?
- Business expenses
CORRECT ANSWER : Business expenses
Question : These are all accurate statements regarding
universal life insurance EXCEPT
- Policy loans are not permitted
CORRECT ANSWER : Policy loans are not permitted
Question : Which of these is NOT relevant when determining
the amount of personal life insurance needed?
- Local unemployment rate
CORRECT ANSWER : Local unemployment rate
Question : Who elects the governing body of a mutual
insurance company?
- Policyholders
CORRECT ANSWER : Policyholders
Question : Why would evidence of insurability be required for
a person insured with a variable universal life policy?
- The face amount is increased
CORRECT ANSWER : The face amount is increased
Question : At what point are death proceeds paid in a joint life
policy?
- When the first insured dies
CORRECT ANSWER : When the first insured dies
Question : What is considered a valid reason for small
businesses to insure the lives of its major shareholders?
- Fund a buy-sell agreement
CORRECT ANSWER : Fund a buy-sell agreement
Question : Which action will trigger a penalty tax on
premature distributions from a modified endowment contract
(MEC)?
- Policy loans
CORRECT ANSWER : Policy loans
Question : Dividends from a mutual insurance company are
paid to whom?
- Policyowners
CORRECT ANSWER : Policyowners
Question : Traditional individual retirement annuity (IRA)
distributions must start by
- April 1st of the year following the year the participant
attains age 70 1/2
CORRECT ANSWER : April 1st of the year following the
year the participant attains age 70 1/2
Question : How are Roth IRA distributions normally taxed?
- Distributions are received tax-free
CORRECT ANSWER : Distributions are received tax-free
Question : How can an insurance company minimize
exposure to loss?
- Reinsurance
CORRECT ANSWER : Reinsurance
Question : All of the following statements about traditional
individual retirement accounts are false EXCEPT
- 10% penalty is applied to withdrawals before age 59 1/2
CORRECT ANSWER : 10% penalty is applied to
withdrawals before age 59 1/2
Question : All of these statements concerning universal life
insurance are false EXCEPT
- Policy indicates how much of the premium is used toward
company expenses