Kentucky Life Insurance State Exam

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