Wisconsin Life Insurance Definitions
Exam with Correct Answers
Cross Purchase Plans - CORRECT ANSWER Agreements that provide that upon a
business
... [Show More] owner's death, surviving owners will purchase the deceased's interest, often
with funds from life insurance policies owned by each principal on the lives of all other
principals.
Entity Plans - CORRECT ANSWER Agreements in which a business assumes the
obligation of purchasing a deceased owner's interest in the business, thereby
proportionately increasing the interests of surviving owners
Human Life Value Approach - CORRECT ANSWER An individual’s economic worth,
measured by the sum of the individuals future earnings that is devoted to the individuals
family.
403(b) Plan - CORRECT ANSWER A tax-deferred retirement plan for certain
employees of public schools, employees of specific tax-exempt organizations, and
certain ministers. For example: teachers, hospital workers, ministers, and some other
public employees
1035 Contract Exchange - CORRECT ANSWER Applies to annuities. If an annuity is
exchanged for another annuity, a gain (for tax purposes) is not realized. This is also true
for a life insurance policy or an endowment contract exchanged for an annuity.
However, an annuity cannot be exchanged for a life insurance policy. This provision in
the tax code allows you, as a policyholder, to transfer funds from a life insurance,
endowment or annuity to a new policy, without having to pay taxes
Accumulation Period - CORRECT ANSWER The time over which the annuitant makes
payments or investments in an annuity, and when those payments earn interest tax
deferred.
Accumulation Units - CORRECT ANSWER A variable annuity contract owner's interest
in the separate account prior to annuitization.
Annuitant - CORRECT ANSWER The person that buys an annuity; may or may not be
an annuity's policyowner. The annuitant's life expectancy determines the annuity
payments.
Annuity Units - CORRECT ANSWER at the time the variable annuity benefits are to be
paid out to the annuitant, the accumulation units in the participant's individual account
are converted into annuity units.
Cash Refund Option - CORRECT ANSWER Provides that, upon the death of an
annuitant before payments totaling the purchase price have been made, the excess of
the amount paid by the purchaser over the total annuity payments received will be paid
in one sum to designated beneficiaries.
Deferred Annuity - CORRECT ANSWER An annuity in which the rents begin after a
specified number of periods. May be purchased on either a single premium or flexible
premium basis. Typically do not begin making payments for at least 1 year after the
date of purchase.
Equity Indexed Annuity - CORRECT ANSWER A fixed, deferred annuity that allows the
owner to participate in the growth of the stock market and provides downside protection
against the loss of principal and prior interest earnings if the annuity is held to term.
Exclusion Ratio - CORRECT ANSWER Fraction used to determine amount of annual
annuity income exempt from federal income tax. Exclusion ratio is the total contribution
or investment in the annuity divided by the expected ratio.
Fixed Annuity - CORRECT ANSWER An annuity that offers fixed payments and
guarantees a minimum rate of interest to be credited to the purchase payment or
payments.
Immediate Annuity - CORRECT ANSWER Provides for payment of annuity benefit at
one payment interval from date of purchase. Can only be purchased with a single
payment.
Joint and Survivor Option - CORRECT ANSWER A settlement option which guarantees
that benefits will be payed on a life-long basis to two or more people. This option may
include a period certain and the amount payable is based on the ages of the
beneficiaries. When the surviving annuitant dies, no further payments are made to
anyone. A full survivor option pays the same benefit amount to the survivor. A two-thirds
option pays two-thirds of the original joint benefit. A one-half survivor option pays onehalf of the original joint benefit. [Show Less]