36. Dean is the owner and insured under a $100,000 life insurance policy that has a cash value of $68,000. He takes a withdrawal of $45,000. Which of the following statements is true? a. Dean must use the withdrawal to purchase an immediate annuity. b. Dean must pay interest on the withdrawal at a rate set by the IRS. c. Dean must pay back the withdrawn funds within two years or the policy will be canceled. d. Dean's withdrawal will reduce the amount of death benefits payable to his beneficiary. 37. All of the following are provisions commonly included in cash value life insurance policies that can provide a source of funds for long-term care needs EXCEPT: a. annuitization b. accelerated benefits c. cash value loans d. policy surrender 38. How does a life insurance lifetime settlement differ from a life insurance viatical settlement? a. A lifetime settlement does not require a terminal illness; a viatical settlement does. b. A lifetime settlement is available to all policyholders; a viatical settlement is available only to healthy seniors, typically those between the ages of 55 and 65. c. A lifetime settlement is between the insurance company and the insured; a viatical settlement is between the insured and a third party. d. A lifetime settlement payout will equal the policy's death benefit; a viatical settlement payout is less than the policy's cash value. 39. Who of the following is engaging in unethical behavior? a. Producer A uses humor to help clients understand the complexities of long-term care coverage. b. Producer B avoids telling customers the limitations associated with a particular insurance product.
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21. What is the standard free-look period provided by most annuity contracts? a. 10 days b. 30 days c. 45 days d. 60 days 24. Pete invested $50,000 in a variable annuity 15 years ago when he was 52. The contract is now valued at $180,000, and Pete elects to annuitize under a straight life option. The AIR is 5 percent, and the annuity purchase rate is $6.50. What is Pete's initial income payment? a. $900 b. $1,170 c. $2,500 d. $3,250 25. At the age of 68, Seth elected a life and 10-year term certain option for the payout of his $100,000 annuity. All of the following statements are true EXCEPT: a. The annuity will make income payments for a minimum of 10 years. b. Seth will receive an income stream for as long as he lives. c. At Seth's death, his beneficiary will receive a minimum of $100,000. d. If Seth were to die at the age of 79, no payment would be made to a beneficiary. 29. What is the early distribution tax penalty that applies to withdrawals from a deferred annuity equal to? a. 10 percent of the total withdrawal b. 10 percent of the taxable amount of the withdrawal c. 10 percent of the nontaxable amount of the withdrawal d. 10 percent of the amount invested in the contract
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26. Ricardo has been in and out of rehab because of his addiction to alcohol, some of his stays lasting for months. Will Ricardo's LTCI policy cover his repeated institutionalization? a. Yes, because it is a chronic condition. b. No, because LTCI insurance doesn't pay for any sort of rehabilitation. c. Yes, because there is a legitimate long-term need. d. Probably not, because treatment for drug or alcohol addiction is an exclusion in most LTCI policies. 27. Which LTCI policy feature prevents the insurer from terminating the policy, raising the rates, or making changes in any provisions based on the health of the insured while the policy is in force? a. restoration of benefits provision b. nonforfeiture provision c. guaranteed renewability provision d. return of premium provision 28. A few years ago, Gary purchased a long-term care partnership policy. He had paid a total of $7,000 in premiums when he made claim for benefits. The policy paid out its full $200,000 benefit. If Gary needs to turn to Medicaid for continued payment of his long-term care costs, how much of his assets will be protected from the spend-down requirement due to his partnership policy? a. $7,000 b. $193,000 c. $200,000 d. $207,000 29. All of the following statements regarding today's long-term care partnership programs are true EXCEPT: a. they are intended to help alleviate the financial burden on state Medicaid programs b. they require that individuals purchase a qualified long-term care partnership policy c. they are designed to protect all of an individual's assets and income from the Medicaid spend-down requirement d. they do not guarantee that an individual who purchased a policy will qualify for Medicaid benefits
17. Lila invested $10,000 in one of Long Life Insurance Company's annuity contracts. When issued, the contract was paying a 5 percent rate of return. Two years later, Long Life increased this rate to 7 percent. Underlying Lila's contract is a 3 percent rate of return, guaranteed for the life of the contract. What kind of annuity does Lila own? a. a fixed immediate annuity b. a variable immediate annuity c. a fixed deferred annuity d. a variable deferred annuity 19. Long Life Insurance Company offers a fixed annuity that includes a standard death benefit provision, a seven-year surrender charge period, the option to annuitize at the annuitant's age 65, and a free withdrawal period. What is the length of the free withdrawal period? a. until the contract owner dies b. until the annuitant's age 65 c. ten years d. seven years 20. What is the duration of an annuity's free withdrawal period? a. It is the same as its surrender charge period. b. It is based on the amount of the initial premium. c. It is longer for nonqualified contracts than for qualified contracts. d. It is left to the discretion of the contract owner.
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