MLAHP Minnesota Life Accident and Health Producer Exam - Set 5 - Part 3

Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 41: An employer tells workers that at retirement each of them will receive a monthly pension equal to a stated share of final salary, with the size of that promised payment written into the plan document itself. Which kind of retirement plan operates this way?

A defined benefit plan

A defined contribution plan

A simplified employee pension plan

A profit-sharing plan

Question 42: A certificate holder is terminated on the first of the month and dies eighteen days later, having neither applied for conversion nor paid any individual premium. His widow files a claim with the group insurer. How must the insurer treat this claim?

Deny the claim for lack of application

Pay the death benefit as if converted

Refund the group premiums to the estate

Pay only half of the group amount

Question 43: A policyowner pays annual premiums on a personally owned whole life contract and notices that the cash value grows each year without any tax form arriving. Which of the following states the federal income tax treatment of those premiums and of the interest credited inside the policy?

Premiums deductible; credited interest taxed annually

Premiums deductible; interest permanently free of tax

Premiums nondeductible; credited interest taxed yearly

Premiums nondeductible; interest credited grows tax-deferred

Question 44: A producer estimates coverage for a thirty-five year old by multiplying his current annual earnings by the number of years remaining until he expects to retire. Nothing about his survivors' specific expenses enters the figure. Which method has the producer used?

The needs approach

The human life value approach

The estate conservation approach

The data gathering interview

Question 45: An owner takes a partial withdrawal from a deferred annuity that is still in its accumulation period and has grown well beyond the premiums paid. Which of the following describes the order in which the withdrawn money is treated for tax?

Premiums come out first, untaxed

The withdrawal is entirely tax-free

Each dollar is half taxable

Interest comes out first and is taxed

Question 46: A policyowner with a terminal diagnosis no longer wants to keep paying premiums and instead sells the contract outright to a licensed company for cash exceeding the surrender value. The buyer then pays the premiums and collects the face amount. Which transaction is described?

A viatical settlement

An absolute assignment made as a gift

An accelerated death benefit rider

A collateral assignment securing a bank loan

Question 47: A federal tax test measures cumulative premiums against the amount that would pay a policy up after seven level annual payments, and a contract failing it loses favorable distribution treatment. Which of the following names the test that classifies a policy as a modified endowment contract?

The annuitization test

The seven-pay test

The accumulation test

The endowment maturity test

Question 48: An employee elects to have a portion of each paycheck withheld and placed in her employer's retirement plan before income taxes are figured, and her employer chooses to add a matching deposit. Which plan feature describes the money the employee sets aside?

A required employer match

A vested employer contribution

A salary deferral contribution

A rollover contribution

Question 49: In a settlement transaction an intermediary represents the policyowner, canvasses several buying companies for competing offers, and earns a commission based on the price obtained. The intermediary never purchases the contract itself. Which party in the settlement market is described here?

The viatical settlement broker

The viatical settlement provider

The viator

The contingent beneficiary

Question 50: A software firm insures its lead engineer so that it can absorb lost sales and pay the cost of recruiting and training a replacement should he die. The firm pays the premiums and collects the proceeds. Which arrangement is this?

An executive bonus plan

A cross-purchase buy-sell plan

A deferred compensation agreement

Key person life insurance

Congratulations!

You have completed all 5 question sets. Good job!

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