Kentucky Life Insurance State Exam Practice Questions with Answers (new)
Question 1: 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 2: Which of these is NOT considered to be a cost
connected with an individual's death?
CORRECT ANSWER : Business expenses
Question 3: These are all accurate statements regarding
universal life insurance EXCEPT
CORRECT ANSWER : Policy loans are not permitted
Question 4: Which of these is NOT relevant when
determining the amount of personal life insurance needed?
CORRECT ANSWER : Local unemployment rate
Question 5: Who elects the governing body of a mutual
insurance company?
CORRECT ANSWER : Policyholders
Question 6: Why would evidence of insurability be required
for a person insured with a variable universal life policy?
CORRECT ANSWER : The face amount is increased
Question 7: At what point are death proceeds paid in a joint
life policy?
CORRECT ANSWER : When the first insured dies
Question 8: What is considered a valid reason for small
businesses to insure the lives of its major shareholders?
CORRECT ANSWER : Fund a buy-sell agreement
Question 9: Which action will trigger a penalty tax on
premature distributions from a modified endowment contract
(MEC)?
CORRECT ANSWER : Policy loans
Question 10: Dividends from a mutual insurance company are
paid to whom?
CORRECT ANSWER : Policyowners
Question 11: Traditional individual retirement annuity (IRA)
distributions must start by
CORRECT ANSWER : April 1st of the year following the
year the participant attains age 70 1/2
Question 12: How are Roth IRA distributions normally taxed?
CORRECT ANSWER : Distributions are received tax-free
Question 13: How can an insurance company minimize
exposure to loss?
CORRECT ANSWER : Reinsurance
Question 14: All of the following statements about traditional
individual retirement accounts are false EXCEPT
CORRECT ANSWER : 10% penalty is applied to
withdrawals before age 59 1/2
Question 15: All of these statements concerning universal life
insurance are false EXCEPT
CORRECT ANSWER : Policy indicates how much of the
premium is used toward company expenses
Question 16: A 55 year old recently received a $30,000
distribution from a previous employer's 401k plan, minus $10,000 withholding. Which federal taxes apply if none of the funds were rolled over?
CORRECT ANSWER : Income taxes plus a 10% penalty tax
on $30,000
Question 17: For insurance purposes, similar objects which
are exposed to the same perils are referred to as
CORRECT ANSWER : Homogeneous exposure units
Question 18: In an individual retirement account (IRA),
rollover contributions are