Contradictions new and improved

#10. Which of the following is true regarding taxation of dividends in participating policies? a) Dividends are not taxable. b) Dividends are taxable only after a certain amount is accumulated annually. c) Dividends are taxable in some life insurance policies and nontaxable in others. d) Dividends are considered income for tax purposes.

A

#19. An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called a) Paid-up additions. b) One-year term purchase. c) Accumulation at interest. d) Reduction of premiums.

A

#37. Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within a) 90 days of a loss. b) 20 days of a loss. c) 30 days of a loss. d) 60 days of a loss.

A

#53. Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a) 3 days b) 5 days c) 10 days d) 14 days

A

#70. Which Universal Life option has a gradually increasing cash value and a level death benefit? a) Option A b) Juvenile life c) Term insurance d) Option B

A

#96. Which of the following is NOT a feature of a noncancellable policy? a) The insurer may terminate the contract only at renewal for certain conditions. b) The premiums cannot be increased beyond the amount stated in the policy. c) The guarantee to renew coverage usually applies until the insured reaches certain age. d) The insured has the right to renew the policy for the life of the contract.

A

10: Long-term care coverage may be available as any of the following options EXCEPT A Endorsement to a health policy. B Group long-term care. C Individual long-term care. D Endorsement to a life policy.

A

11: An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? A A portion of the benefit up to a limit is tax free; the rest is taxable income. B Principal is tax free, but interest is taxed. C The entire benefit will be received tax free. D The entire living benefit is considered taxable income.

A

11: Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days? A 20 B 100 C 80 D 3

A

11: Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? A 100% participation of members is required in noncontributory plans. B Each member covered receives a policy. C Coverage cannot be converted when an individual leaves the group. D Premiums are determined by age, occupation, and individual underwriting.

A

14: Which of the following is an IRS qualified retirement program for the self-employed? A Keogh plan B Split dollar C Buy-sell agreement D 401(k) plan

A

15: If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT A Loss of the owner's income. B Rent. C Utilities. D Employee payroll.

A

2: Regarding the taxation of Business Overhead policies, A Premiums are deductible, and benefits are taxed. B Premiums are not deductible, and benefits are taxed. C Premiums are not deductible, but benefits are deductible. D Premiums are not deductible, but expenses paid are deductible.

A

3: Which of the following definitions would make it easier to qualify for total disability benefits? A The more liberal "own occupation" B The more strict "any occupation" C The more liberal "any occupation" D The more strict "own occupation"

A

5: Which of the following is the required number of participants in a contributory group plan? A 75% B 100% C 25% D 50%

A

7: Premium payments for personally-owned disability income policies are A Not tax deductible. B Eligible for tax credits. C Tax deductible. D Tax deductible to the extent that they exceed 10% of the adjusted

A

#30. In which Medicare supplemental policies are the core benefits found? a) Plans A-D only b) All plans c) Plans A and B only d) Plan A only

B

#60. What license or licenses are required to sell variable annuities? a) No license is required b) Both a life insurance license and a securities license c) Only a life insurance license d) Only a securities license

B

15: The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years? A 1 year B 2 years C 5 years D 7 years

B

4: All of the following long-term care coverages would allow an insured to receive care at home EXCEPT A Home health care. B Skilled care. C Custodial care in insured's house. D Respite care.

B

8: A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay? A 10 days B 15 days C 25 days D 45 days

B

8: Once the person meets the stringent requirements for disability benefits under Social Security, how long is the waiting period before any benefits will be paid? A 90 days B 5 months C 12 months D Benefits will be paid immediately.

B

9: Which of the following is correct regarding the taxation of group medical expense premiums and benefits? A Premiums are tax deductible and benefits are taxed. B Premiums are tax deductible and benefits are not taxed. C Premiums are not tax deductible and benefits are taxed. D Premiums are not tax deductible and benefits are not taxed.

B

#12. Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within a) 30 days. b) 60 days. c) 90 days. d) 120 days.

C

#2. The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the a) Incontestability clause. b) Legal action against us clause. c) Entire contract clause. d) Time limit on certain defenses clause.

C

#42. The period of time immediately following a disability during which benefits are not payable is a) The grace period. b) The blackout period. c) The elimination period. d) The probationary period

C

#79. An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day a) Probationary period. b) Waiver of benefits period. c) Elimination period. d) Blackout period.

C

1: What is the period of coverage for events such as death or divorce under COBRA? A 31 days B 12 months C 36 months D 60 days

C

3: A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then A IRS has no jurisdiction. B The benefit is received as taxable income. C The benefit is received tax free. D The benefit is subject to the exclusionary rule.

C

5: All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT A Fully insured status. B Waiting period of 5 months. C Being age 65. D Inability to perform any gainful work.

C

5: In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? A 1 B 3 C 5 D 10

C

#34. The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the a) Incontestability clause. b) Consideration clause. c) Probationary period. d) Insuring clause.

D

#39. The insurance policy, together with the policy application and any added riders form what is known as a(n) a) Certificate of coverage. b) Contract of adhesion. c) Blanket policy. d) Entire contract.

D

#70. An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) a) Keogh Plan. b) Roth IRA. c) SEP. d) 403(b) Plan (TSA).

D

#72. What provision in an insurance policy extends coverage beyond the premium due date? a) Free look b) Automatic premium loan c) Waiver of premium d) Grace period

D

#74. What is a penalty tax for nonqualified distributions from a health savings account? a) 8% b) 10% c) 12% d) 20%

D

10: Under a Key Person disability income policy, premium payments A Are made by the employee and are not tax-deductible. B Are made by the employee and are tax-free. C Are made by the business and are tax-deductible. D Are made by the business and are not tax-deductible

D

11: Disability income coverage specifies that the policy covers the insured if he is unable to perform any job for which he is qualified. In this case, total disability is defined as A Any occupation - less restrictive than other definitions. B Own occupation - more restrictive than other definitions. C Own occupation - less restrictive than other definitions. D Any occupation - more restrictive than other definitions

D

11: What is the initial period of time specified in a disability income policy that must pass, after the policy is in force, before a loss can be covered? A Contestable period B Elimination period C Grace period D Probationary period

D

12: All of the following statements are true regarding tax-qualified annuities EXCEPT A Annuity earnings are tax deferred. B They must be approved by the IRS. C Withdrawals are taxed. D Employer contributions are not tax deductible.

D

12: How many consecutive months of coverage (other than in an acute care unit of a hospital) must LTC insurance provide in this state? A 24 B 36 C 6 D 12

D

15: Which of the following describes taxation of individual disability income insurance premiums and benefits? A premiums are not tax deductible, but benefits are taxable. B Premiums are tax deductible, but benefits are not taxable. C Premiums are tax deductible, and benefits are taxable. D Premiums are not tax deductible, and benefits are not taxable.

D

1: In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits? A 7 days B 10 days C 30 days D 60 days

D

5: All of the following are characteristics of group life insurance EXCEPT A Amount of coverage is determined according to nondiscriminatory rules. B Individuals covered under the policy receive a certificate of insurance. C Certificate holders may convert coverage to an individual policy without evidence of insurability. D Premiums are determined by the age, sex and occupation of each individual certificate holder.

D