Free Insurance Licensing OH-Life-Agent-Series-11-44 Practice Exam with Questions & Answers | Set: 3

Under Ohio insurance regulations, HIV testing as part of the underwriting process requires informed consent. The applicant must be notified in writing and must sign a consent form prior to the test. This ensures compliance with privacy and discrimination laws and protects the rights of the applicant.

The Cost-of-Living Adjustment (COLA) rider allows the insured to increase the policy's face value based on increases in the Consumer Price Index (CPI). In this case, a 3% CPI increase on a $200,000 policy allows a proportional increase in the face amount.

Calculation: $200,000 × 0.03 = $6,000

Therefore, the new face amount can be increased by $6,000.

The Human Life Value approach estimates the amount of life insurance a person needs by calculating the present value of their future earnings. It considers salary, inflation, years of employment remaining, and other economic factors. This method quantifies the financial loss a family would suffer if the income earner died prematurely.

A "Period Certain" annuity, also known as a "term certain" or "fixed period" annuity, guarantees payments for a specified period, such as 10, 15, or 20 years, regardless of whether the annuitant lives or dies during that period. If the annuitant dies before the end of the period, the remaining payments are made to a designated beneficiary. This option provides a predictable income stream for a set duration.

ASpousal IRAallows a nonworking spouse to contribute to an individual retirement account based on the working spouse's income. This provision enables households with a single income earner to double their retirement savings potential by allowing both spouses to contribute to separate IRA accounts, subject to IRS contribution limits and eligibility requirements. The working spouse must have sufficient earned income to cover both contributions.

Minors can be named as beneficiaries; however, they cannot directly receive life insurance proceeds. If a minor is designated as a beneficiary, a guardian or custodian must be appointed to manage the funds until the minor reaches the age of majority.

According to the Ohio Transfers to Minors Act:

Immediate annuities are designed to start income payments shortly after a lump sum is paid and typically do not have a surrender option once the income phase has begun. In contrast, deferred annuities allow for surrender during the accumulation phase, often subject to surrender charges that decrease over time.

According to the Ohio Life Insurance Study Guide:

"Deferred annuities can be surrendered during the accumulation period, often with surrender charges that decrease over time. Immediate annuities, once annuitized, generally do not allow for surrender."

Ohio law mandates that life insurance applications contain questions aimed at preventingStranger-Originated Life Insurance (STOLI), which involves investors purchasing policies for profit, rather than legitimate insurable interest.

"Applications must include questions to detect and deter STOLI transactions, which are prohibited as they lack insurable interest and are against public policy."

A partial surrender in a Universal Life Insurance policy refers to the policyholder withdrawing a portion of the policy's cash value. This action reduces both the cash value and the death benefit of the policy. Unlike policy loans, which must be repaid with interest, partial surrenders are permanent withdrawals and do not require repayment.

According to the Ohio Life Insurance Study Guide:

"A partial surrender is a withdrawal of a portion of the policy's cash value. This reduces the policy's cash value and death benefit accordingly."

In a whole life insurance policy, the cash value grows on a tax-deferred basis. This means that as long as the policy remains active, the policyholder does not pay income tax on the gains within the cash value. Taxes may apply if the policy is surrendered or lapses, and the amount received exceeds the total premiums paid into the policy.