The accounting method used in developing the annual statement that is filed with the state insurance department is Generally Accepted Accounting Principles GAAO Statutory International Accounting...

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  1. The accounting method used in developing the annual statement that is filed with the state insurance department is



  1. Generally Accepted Accounting Principles GAAO

  2. Statutory

  3. International Accounting Standards (IFRS)

  4. None of the above



  1. Which of the following is
    not
    a factor used in underwriting



  1. Age

  2. Occupation

  3. Religion



  1. When should a planner not consider term insurance for a client?



  1. Cash flow is limited

  2. The insurance need is short term

  3. The client wants the ability to access borrowed funds in the future

  4. None



  1. Which of the following should
    not
    appear on a Universal Life policy illustration



  1. Surrender charges

  2. Minimum interest crediting rate

  3. Maximum mortality charges

  4. Guaranteed dividends



  1. What does the phrase “puffed” dividends mean with regard to policy illustrations?



  1. They are overly optimistic

  2. They are consistent with what has been historically paid

  3. They are guaranteed

  4. They are lower than what has been historically paid



  1. Calculate the annual 10year Net Cost per thousand using the Traditional Method given the following information for a $1000 policy



Total Premiums:$222.40
Total Dividends:$55.10
Cash value year 10:$160.00
Term Dividend:$5.25


  1. Taxation of annuities are governed under:



  1. IRC sec 7702

  2. IRC sec 7702a

  3. IRC sec 7

  4. IRC sec 72



  1. Which of the following are types of annuities:



  1. Immediate annuities

  2. Deferred annuities

  3. Life annuities

  4. Fixed period annuities



  1. I and ii only

  2. I, ii and iii

  3. I, iii and iv

  4. All



  1. A variable annuity allows the annuitant to manage the assets supporting the account during the accumulation phase of the contract.



  1. True

  2. False



  1. Which of the following is
    not
    a feature of
    fixed
    annuities?



  1. Safety of principal

  2. Guaranteed level o interest

  3. Payment to the annuitant may vary depending upon investment results

  4. To provide a conservative complement to other investments



  1. Which of the following rating agencies is usually considered the most lenient?



  1. A.M. Best

  2. Moody’s

  3. Fitch

  4. Standard & Poor’s



  1. Which of the following is (are) true?



  1. A mutual company has no shareholders

  2. A stock company has no shareholders

  3. A mutual company, in theory, is owned by its policyholders

  4. A stock company, in theory, is owned by its shareholders



  1. I only

  2. I and iii only

  3. I, iii and iv only

  4. All



  1. Average policy and company size are related



  1. True

  2. False



  1. Calculate the exclusion ratio for a 70 yr old female who buys a life only annuity paying $3,840 per year for $24,000. Her life expectancy is 16yrs



  1. Given that the exclusion ratio for a $100 per month payout annuity is 62.50% which of the following is true:



  1. $37.50 is considered interest and taxed at normal income rates

  2. $37.50 is considered interest and taxed at capital gains rates

  3. $62.50 is considered interest and taxed at normal income rates

  4. $62.50 is considered interest and taxed at capital gains rates



  1. When should a fixed annuity not be considered as part of the financial planning process?



  1. When a person wants an income that cannot be outlived

  2. When the ability to manage the supporting assets is desired

  3. When a person wants a minimum guaranteed interest rate

  4. When tax deferred growth is desired



  1. Which of the following are factors to consider when determining an appropriate type of coverage for a client?



  1. Client’s preferences, prejudices, and priorities

  2. Holding period probabilities

  3. Client’s ability to pay a premium

  4. Amount of insurance method



  1. Ii only

  2. Iii and iv only

  3. I, ii and iii only

  4. All



  1. What problem weakens the value of the traditional net cost method?



  1. It adds premiums over a stated period of time

  2. It divides the total net cost by the policy face amount

  3. It ignores the time value of money

  4. It subtracts total dividends from total premiums



  1. Which of the following is the key factor to remember when considering whether to replace an existing policy? (This is from the perspective of a prospective client)



  1. Will the policy pay new commission

  2. Match the product to the problem

  3. All whole life policies sold prior to 1986 should be replaced

  4. If the price is two time less than the Belth benchmark, the policy should be replaced



  1. Which of the following are correct when comparing an FPDA and a SPDA?



  1. A SPDA annuity phase begins immediately

  2. A FPDA annuity phase is deferred

  3. An FPDA has a flexible premium

  4. A SPDA has a single premium



  1. (1) and (4) only

  2. (2) and (3) only

  3. (1), (2) and (3) only

  4. (2), (3) and (4) only



PART B.

  1. Given the following information, what us the monthly mortgage payment?


Term: 30years, interest raeww:6% payable monthly, mortgage amount: $100,000


  1. What would be the outstanding loan balance at the end of 10years?



005_5k-rbinglh2.docx
Answered Same DayDec 22, 2021

Answer To: The accounting method used in developing the annual statement that is filed with the state insurance...

Robert answered on Dec 22 2021
124 Votes
1. b. Statutory (Accounting Principles)
2. c. Religion
3. c. The client wants the ability to access borrowed funds in the future.
Reason: Term insurance does not accumulate cash value and hence, the client cannot access funds
in future.
4. d. Guaranteed dividends
5. a. They are overly optimistic
6. c. $0.205
Total premiums for $1000 policy less total dividends less cash value less term dividends = Insurance
cost for 10 years
This divided by 10 gives the net cost per year and which further divided by 1000 gives the net cost
per $1000.
($220.40*1000) less ($55.10*1000) less ($160*1000) less( $5.25*1000) = $2050...
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