FIN 3310 Final Exam
Kathryn taught at Fun Academic University for 25 years and is filing for Social Security retirement benefits this year, when she turns age 72. Her PIA is $1,000 per month as adjusted for inflation. How much in benefits will she receive assuming her full retirement age was 66? A) $1,320. B) $1,360. C) $1,480. D) $1,587.
A) $1,320.
Mike has the following split limits of coverage on his Personal Auto Policy of 100/300/50. Which of the following best describes Mike's coverage? A) $100,000 per person for bodily injury, $300,000 per occurrence for bodily injury and $50,000 for property damage. B) $100,000 per covered auto, $300,000 per occurrence for covered auto and $50,000 for uninsured motorist. C) $100,000 per person for bodily injury, $300,000 per occurrence for property damage and $50,000 for uninsured motorist. D) $100,000 for property damage, $300,000 per person for bodily injury and $50,000 for property damage.
A) $100,000 per person for bodily injury, $300,000 per occurrence for bodily injury and $50,000 for property damage.
Mr. Johns has a major medical insurance policy with a $1,000 deductible, an 80% coinsurance clause, and an out-of-pocket maximum of $4,000. He becomes ill and is admitted to the hospital for several days. When he is discharged, his hospital bill is $5,000, and his doctor bills are $2,500. What is the amount that his insurance co-pay will pay? A) $5,200. B) $6,000. C) $6,500. D) $7,500.
A) $5,200
How long would someone have to wait to receive Social Security disability benefits if they qualify? A) 5 months. B) 6 months. C) 12 months. D) Benefits are paid immediately if eligible
A) 5 months
Bill rents an apartment for $500 per month and has $50,000 content coverage. If he is unable to occupy his apartment due to a negligent fire caused by a neighbor, for up to how many months could he rent another apartment if the cost of the new apartment is $750 per month? A) 60 months. B) 6 months. C) None because negligent acts are not covered. D) None because content coverage does not cover reimbursement for rent.
A) 60 months.
Which of the following is true? A) A fixed annuity mitigates the risk of superannuation B) A fix annuity mitigates the risk of superannuation and inflation C) a fixed annuity is always a deferred annuity D) a fixed annuity is always for a single life expectancy
A) A fixed annuity mitigates the risk of superannuation
Harry, age 63 purchased an immediate annuity. The annuity will provide monthly payments to Harry for as long as he lives. If he dies before receiving payments for 20 years, the remaining payments will go to his beneficiary. What type of annuity did Harry purchase? A) A life annuity with a term-certain guarantee. B) An installment refund annuity. C) A straight-life annuity. D) A joint and survivor annuity
A) A life annuity with a term-certain guarantee.
Medicare Part A provides hospital coverage. Which of the following persons is not covered under Part A? A) A person 62 or older and receiving railroad retirement. B) Disabled beneficiaries regardless of age that have received Social Security for two years. C) Chronic kidney patients who require dialysis or a renal transplant. D) A person 65 or older entitled to a monthly Social Security check.
A) A person 62 or older and receiving railroad retirement.
The principle of indemnity requires that: A) A person is entitled to compensation only to the extent that financial loss has been suffered. B) Insured cannot indemnify himself from both the insurance company and a negligent third party for the same claim. C) The insured must be subject to emotional or financial hardship resulting from the loss. D) The insured and insurer must both be forthcoming with all relevant facts about the insured risk and coverage provided for that risk.
A) A person is entitled to compensation only to the extent that financial loss has been suffered.
Tom and Tim are brothers who frequently drive each other's cars. Their automobiles are insured as follows: Tom is negligently driving Tim's car and has an accident causing bodily injury to the other party involved in the accident in the amount of $50,000. Which insurer will pay, and how much? A) ABC will pay $40,000, and LMV will pay $10,000. B) LMV will pay $50,000, and ABC will pay nothing. C) ABC will pay $40,000, and LMV will pay nothing. D) ABC will pay $25,000, and LMV will pay $25,000.
A) ABC will pay $40,000, and LMV will pay $10,000.
Harold wants to participate in the stock market by purchasing a deferred annuity but wants protection against the loss of his principal. What annuity is best suited for Harold? A) An equity-indexed annuity. B) A variable annuity. C) A fixed annuity. D) A single-premium, variable annuity.
A) An equity-indexed annuity.
When must an insurable interest exist for a property insurance claim? A) At the policy inception and time of loss. B) At the policy inception only. C) At the time of the loss. D) Either at the policy inception or at the time of the loss.
A) At the policy inception and time of loss.
Medical insurance is commonly known as health insurance and can be purchased from private insurance companies. Which of the following best describes the classes of medical insurance? A) Coverage for hospital expense, surgical expense, physician expense, and major medical expense. B) Coverage for hospital expense, nonmajor medical expense, surgical expense, and physician expense. C) Coverage for hospital expense, comprehensive major medical expense, nonmajor medical expense, and physician expense. D) Coverage for comprehensive major medical expense, nonmajor medical expense, surgical expense, and physician expense.
A) Coverage for hospital expense, surgical expense, physician expense, and major medical expense.
All of the following statements concerning Social Security benefits are correct except: A) In order to obtain SSI benefits, an individual must be age 65 or older and must be disabled. B) The number of days that Medicare covers care in hospitals and skilled nursing facilities is measured in what is termed benefit periods. C) The definition of disability is that the individual is unable to engage in any substantial gainful activity due to a physical or mental problem expected to last at least a year or expected to result in death. D) Benefits are payable at any age to workers who have enough Social Security credits and who have a severe physical or mental impairment that is expected to prevent them from doing "substantial" work for a year or more or who have a condition that is expected to result in death.
A) In order to obtain SSI benefits, an individual must be age 65 or older and must be disabled.
Which of the following is incorrect? A) Long-term care insurance is needed for everyone. B) Many people do not need long-term care insurance. C) Those with millions in net worth do not need long-term care insurance. D) Many people who need long-term care insurance do not have it.
A) Long-term care insurance is needed for everyone
Disability policies have many characteristics and provisions. Which of the following is correct regarding policies that are guaranteed renewable versus non-cancelable? A) Non-cancelable prevent the insurance company from cancelling the policy as long as the premiums are paid. B) Guaranteed renewable and non-cancelable disability policies often have policy increases. C) Guaranteed renewable and non-cancelable disability policies always provide protection for the insured until age 65. D) Guaranteed renewable policies can experience premium increases based on the health conditions of the insured
A) Non-cancelable prevent the insurance company from cancelling the policy as long as the premiums are paid
Meg has money in a 401(k) plan with her employer. She has no dependents or heirs and wants to maximize her monthly income. She is retiring and wants to move the money into an annuity contract. Which would be the best option for Meg? A) Single-premium life annuity. B) Flexible-premium annuity. C) Deferred annuity. D) Installment refund annuity.
A) Single-premium life annuity.
Which of the following are correct? A) Surviving spouses are entitled to 100% of the worker's benefit amount after the worker dies presuming the surviving spouse is age 60 or older B) Divorced spouses can also claim benefits based on their ex-spouse's record if they were married 8 years or longer C) For someone to delay benefits until age 70 based solely on payback or break even, the person would have to live to at least age 92, without considering the time value of money D) All of the above are false
A) Surviving spouses are entitled to 100% of the worker's benefit amount after the worker dies presuming the surviving spouse is age 60 or older
Antoine immigrated from Italy last century, became a citizen and has worked the better part of his life in the United States, for which he is truly thankful. His full retirement age for Social Security benefits is age 66, but after a hard life working he wants to retire at age 63 and travel in America and back to his homeland. After contacting the Social Security administration, they informed him that his benefit at age 63 would be $1,200 per month. Just prior to retiring, he sold his business for $100,000. Which of the following statements is correct? A) The sale of the business will not impact the amount of his retirement benefits from Social Security. B) The sale of the business will cause his benefits to be reduced by $1 for every $2 over the annual limit. C) The sale of the business will definitely increase the portion of his Social Security benefits that are subject to income tax. D) The sale of the business may cause him to pay a higher Medicare Part B premium in the year of the sale due to his higher income.
A) The sale of the business will not impact the amount of his retirement benefits from Social Security.
Fred is 30 years old and recently began a job with a salary of $60,000. He is single but has been dating Lisa for 3 years. He expects to marry her within the next 5 years. Fred lives with his parents. What is the amount of life insurance that Fred currently needs? A. $0. B. $100,000. C. $60,000 x 6 = $360,000. D. $60,000 x 10 = $600,000.
A. $0
Betty owns a $150,000 whole life participating insurance policy that she purchased ten years ago. She has paid premiums of $4,000 each year since she bought the policy, and the current cash surrender value is $60,000. Betty has received $10,000 in paid dividends since the policy inception. Which of the following statement(s) is/are correct regarding Betty's policy? 1. If Betty surrenders the policy now, she will have a taxable gain of $30,000 taxed as ordinary income. 2. The dividends that were paid on Betty's policy were subject to ordinary income tax treatment. A. 1 only. B. 2 only. C. Both 1 and 2. D. Neither 1 nor 2.
A. 1 only
Marsha, age 35, is a single mother of one daughter, Skyler, age 9. Marsha is a secretary with annual income of $35,000 and a negative net worth. Marsha has two objectives: (1) to protect Skyler in the event of her untimely death and (2) to save for her own retirement. Which of the following life insurance policies should she buy? A. 20-year term insurance policy. B. An ordinary whole life insurance policy. C. A variable universal policy. D. A universal policy.
A. 20-year term insurance policy
Which of the following life insurance policies provides the highest benefit for the lowest premium and is simply a pure death benefit policy? A. Term B. Whole Life C. Universal Life D. All of the Above
A. Term
Donna owns a house with a replacement cost of $500,000. She purchases $300,000 of insurance with a coinsurance requirement of 80% and a $500 deductible. If Donna's house is hit by a hurricane and she suffers a $150,000 loss, what will the insurer pay? A) $74,500. B) $112,000. C) $119,500. D) $149,500.
B) $112,000
Antoine immigrated from Italy last century, became a citizen and has worked the better part of his life in the United States, for which he is truly thankful. His full retirement age (normal retirement age) for Social Security benefits is age 66, but after a hard life working he wants to retire at age 63 and travel throughout America and back to his homeland. If his benefit at age 66 is $1,000 per month, how much will he receive in Social Security retirement benefits if he begins receiving benefits at age 63? A) $700.00. B) $800.00. C) $812.50. D) $1,000.00. The same benefit, he will simply not receive it for as long.
B) $800.00.
Which of the following is a characteristic of guaranteed renewability? 1. The insurer guarantees to renew the policy to a stated age. 2. The policy is noncancelable and the premium may not be increased. 3. Renewal is solely at insurer's discretion. 4. The insurer has the right to increase the premium rates for the underlying class in which the insured is placed. A) 1 only B) 1 and 4 C) 1, 2, and 4 D) 1, 2, 3 and 4
B) 1 and 4
Betty Sue, age 75, is a widow with no close relatives. She is very ill, unable to walk, and confined to a custodial nursing home. Which of the following programs is likely to pay benefits towards the cost of the nursing home? 1. Medicare may pay for up to 80 additional days of care after a 20-day deductible. 2. Medicaid may pay if the client has income and assets below state-mandated thresholds. A) 1 only. B) 2 only. C) Both 1 and 2. D) Neither 1 nor 2.
B) 2 only.
Which of the following parties to an annuity contract serves as the measuring life? 1. Owner. 2. Annuitant. 3. Beneficiary. A) 1 only. B) 2 only. C) Both 1 and 3. D) Both 2 and 3.
B) 2 only.
Which of the following is correct regarding a peril and hazard? A) A hazard is the proximate or actual cause of a loss. B) A peril is the proximate or actual cause of a loss. C) A peril is the condition that creates or increases the likelihood of a loss occurring. D) None of the above.
B) A peril is the proximate or actual cause of a loss.
Which of the following concerning the Social Security system is correct? A) Workers entitled to retirement benefits can currently take early retirement benefits as early as age 59. B) A worker who takes early retirement benefits will receive a reduced benefit because he will receive more monthly benefit payments as payments commence earlier than if the worker had waited and retired at full retirement age. C) Family members of an individual who are eligible for retirement or disability benefits include a spouse if the spouse is at least 59 years old or under 59 but caring for a child under age 16. D) Generally, individuals who are over the age of 59 and receive Social Security benefits automatically qualify for Medicare benefits.
B) A worker who takes early retirement benefits will receive a reduced benefit because he will receive more monthly benefit payments as payments commence earlier than if the worker had waited and retired at full retirement age.
Custodial or personal care is? A) Skilled nursing care provided. B) Assistance with daily living tasks. C) Making the terminally ill comfortable. D) Individualized care
B) Assistance with daily living tasks.
When must an insurable interest exist for a life insurance claim? A) At the policy inception and time of loss. B) At the policy inception only. C) At the time of the loss. D) Either at the policy inception or at the time of the loss.
B) At the policy inception only.
Section II of a HO-3 policy provides what type of protection for the homeowner? A) Dwelling. B) Damage to other's property. C) Loss of use. D) Personal property.
B) Damage to other's property.
The TransUnion automobile insurance score uses all of the following except: A) Credit payment history. B) Driving record. C) Credit utilization percent. D) The number of credit accounts.
B) Driving record.
Which of the following likely has the highest credit score? A) Bob has 5 credit cards, credit utilization of 40%, and a perfect payment history for 5 years. B) George has 3 credit cards, credit utilization of 29%, an installment loan, a mortgage, and a perfect payment history for 3 years. C) Tim has 2 credit cards totaling a $50,000 limit. D) Fred has a 30-year mortgage in the 10th year with a perfect payment history and the mortgage is his only debt.
B) George has 3 credit cards, credit utilization of 29%, an installment loan, a mortgage, and a perfect payment history for 3 years.
Joe walks into his insurance agent's office and notices his agent's name on a business card and the insurer's name on letterhead. If an agency agreement exists, what type of authority does Joe believe his agent has to enter into an insurance contract? A) Express Authority. B) Implied Authority. C) Apparent Authority. D) None of the Above.
B) Implied Authority.
A subrogation clause means that: A) A person is entitled to compensation only to the extent that financial loss has been suffered. B) Insured cannot indemnify himself from both the insurance company and a negligent third party for the same claim. C) The insured must be subject to emotional or financial hardship resulting from the loss. D) The insured and insurer must both be forthcoming with all relevant facts about the insured risk and coverage provided for that risk
B) Insured cannot indemnify himself from both the insurance company and a negligent third party for the same claim.
Which of the following is the most favorable definition of total disability in a disability insurance policy? A) Any occupation B) Own occupation C) Modified own occupation D) Split definition
B) Own occupation
All of the following are major credit reporting agencies except: A) Equifax. B) Pan American. C) Experian. D) TransUnion.
B) Pan American
Which of the following offers identical coverage for all forms of a homeowners insurance policy? A) Section I. B) Section II. C) No form is identical. D) All forms are identical.
B) Section II.
Jack has a disability income policy that pays a monthly benefit of $2,400. Jack has been disabled for 60 days, but he only received $1,200 from his disability insurance. Which of the following is the probable reason that he only received $1,200? A) The policy has a deductible of $1,200. B) The elimination period is 45 days. C) The policy has a 50% coinsurance clause. D) Jack is considered to be only 50% disabled
B) The elimination period is 45 days
When determine the percentage of an annuity income that is not taxable, the investment in the annuity is divided by the total of the expected payments to be received. What is this quotient called? A) the inclusion ratio B) the exclusion ration C) the current ratio D) the working capital ratio
B) The exclusion ration
Part B of Medicare is considered to be supplemental insurance and provides additional coverage to participants. Which of the following is true regarding Part B coverage? A) The election to participate must be made at the time the insured is eligible for Part A Medicare and at no time after. B) The premiums for Part B are paid monthly through withholding from Social Security benefits. C) Once a participant elects Part B, he must maintain the coverage until death. D) Coverage under Part B does not include deductibles or coinsurance.
B) The premiums for Part B are paid monthly through withholding from Social Security benefits.
Why are auto loans generally the easiest loans to get? A) Due to consumer protection. B) There is usually a down payment, and an auto loan is secured. C) An auto loan only requires a minimum credit score. D) Automobiles are easy to repossess due to GPS being placed in all cars with loans.
B) There is usually a down payment, and an auto loan is secured.
Joe, age 33, is married and has a newborn son. Joe is concerned about providing for his family in the event of his premature death. He is concerned about the long-term affordability of life insurance but is able to budget a fixed amount for a period of time. Which of the following policies would you recommend? A. Annually renewable term B. Level-premium term C. Whole life insurance D. Single-premium annuity
B. Level-premium term
Ryan and Jody are age 68 and 72, respectively, and are married. They have significant assets that will be subject to estate taxes upon the second spouse's death. Which of the following life insurance policies would you recommend? A. Annually renewable term B. Second-to-die whole life policy C. First-to-die whole life policy D. First-to-die whole life policy
B. Second-to-die whole life policy
Which of the following life insurance policies contains a cash-value savings component that reaches the face value of the policy at age 100 -120? A. Term B. Whole Life C. Universal Life D. Lifetime annuity
B. Whole Life
The Watson family has a family medical policy that provides the following coverage for all four family members: • $1,000 per person deductible (4 person maximum). • $4,000 out-of-pocket limit per person. • 80/20 coinsurance provision. On a family trip, the Watsons were involved in a car accident when a deer ran into their car while they were driving 75mph. All four family members were hurt. Each person incurred medical expenses of $21,000. How much will the insurance company pay? A) $23,400 B) $28,250 C) $29,000 D) $29,230
C) $29,000
Lucy, an ER surgeon, buys a disability policy with a base benefit of $6,000 and an SIS offset benefit of $1,200. Lucy becomes disabled and eventually receives $1,000 in Social Security disability benefits. How much will she receive from the insurance company after Social Security benefits begin? A) $4,800. B) $6,000. C) $6,200. D) $7,200
C) $6,200
Clara purchases an annuity with after-tax dollars and wants payments to begin next month. What type of annuity did Clara purchase? 1.. Immediate Annuity 2. Deferred Annuity 3. Qualified Annuity 4. Nonqualified Annuity A) 1 and 3 B) 2 and 3 C) 1 and 4 D) 2 and 4
C) 1 and 4
Approximately, what percent of persons over the age of 65 will require some long-term care services at some point in their lives? A) 50%. B) 60%. C) 70%. D) 90%
C) 70%
Patrick is age 67 and receives Social Security retirement income that covers 60 percent of his monthly expenses. He has no dependents. He would like to invest $200,000 in an annuity that will mitigate inflation and provide him with the highest monthly income. Although he has a 20-year table life expectancy, he thinks he has a much longer life expectancy. Which annuity is most suitable for Patrick? A) A single-premium annuity. B) A deferred, fixed annuity. C) A single-premium, variable annuity. D) A single-premium, variable annuity with a guaranteed term equal to his table life expectancy.
C) A single-premium, variable annuity.
Arline is a 70-year-old widow with no dependents. She wants to invest in an annuity that will produce income now. She has $100,000 to invest and wants to receive the most she can in monthly income. Which of the following is the most suitable annuity for Arline based on her objectives? A) A longevity annuity. B) A 20-year term certain, fixed annuity. C) An immediate, single-premium life annuity. D) A deferred, fixed annuity.
C) An immediate, single-premium life annuity.
Due to a recession, Pat has voluntarily changed her status from full-time to part-time with her employer. Prior to the change, she and her husband were covered under the company health plan. Which statement regarding COBRA is correct? A) Because her change is voluntary, COBRA rules do not apply. B) COBRA rules allow continuation of health coverage in this situation for up to 36 months. C) COBRA rules allow continuation of health coverage in this situation for up to 18 months. D) COBRA rules allow continuation of health coverage in this situation for 29 months.
C) COBRA rules allow continuation of health coverage in this situation for up to 18 months.
The auto credit score is? A) The same as the auto insurance score. B) Calculated the same way as FICO. C) Calculated by FICO. D) Only used by 25 - 50% of auto lenders.
C) Calculated by FICO.
When the insured is silent to a fact that is material to the risk being insured, what has occurred? A) Breach of Warranty. B) Misrepresentation. C) Concealment. D) Breach of Indemnity.
C) Concealment.
Raymond lived in New Orleans during hurricane Katrina. His home was destroyed by wind damage, and he was forced to live in a hotel for three months. Which section of his homeowners policy would reimburse him for the increased living expenses associated with the hotel stay? A) Dwelling. B) Other structures. C) Loss of use. D) Personal property.
C) Loss of use.
Noncancelable health insurance contracts are different from guaranteed renewable contracts because: A) Noncancelable policies are not guaranteed renewable. B) Noncancelable policies cannot be canceled in mid-term. C) Noncancelable policies cannot have a premium change. D) Noncancelable policies have more liberal disability benefits.
C) Noncancelable policies cannot have a premium change.
All of the following statements are correct regarding a Personal Auto Policy Part C (Uninsured Motorists) coverage except: A) Payment for property damage. B) Payment for lost wages. C) Payment for punitive damages. D) All of the above.
C) Payment for punitive damages.
What is/are the goal(s) of long-term care? A) Return the recipient to independent living. B) Cure multiple chronic conditions. C) Promote function independence. D) Make a terminal person comfortable.
C) Promote function independence
Jennifer is applying for life insurance, with her two children as the beneficiary. Jennifer has always been told she looks young for her age and although she is 58, she stated that she is 28 on her life insurance application. What would the insurer be most likely to do if Jennifer's beneficiaries attempt to collect on the life insurance policy? A) Void the policy. B) Require payment on premiums for a 58 year old insured. C) Recalculate the face value of the policy based on actual premiums paid. D) Bring a lawsuit against the estate.
C) Recalculate the face value of the policy based on actual premiums paid.
Social Security is funded through all of the following except: A) Employee payroll tax. B) Employer payroll tax. C) Sales tax. D) Self-employment tax.
C) Sales tax.
Which of the following risks can an annuity mitigate? A) Superannuation. B) Mortality. C) Superannuation and purchasing power. D) Mortality and purchasing power.
C) Superannuation and purchasing power.
The two most well-known credit scores are? A) FICO and Auto. B) Auto and Vantage. C) Vantage and FICO. D) FICO and Rico.
C) Vantage and FICO.
Terry has been advised by his insurance agent to purchase a variable universal life insurance policy. He has sought your advice regarding this purchase. All of the following are characteristics of a variable universal policy, except: A. The policy features increasing or decreasing death benefits and flexibility of variable premium payments. B. The policy owner has exclusive investment control over the cash value of the policy. C. The death benefit is guaranteed to be equal to the face value. D. The cash value of a variable universal life policy is dependent on premiums and investment returns.
C. The death benefit is guaranteed to be equal to the face value.
Which of the following life insurance policies has a fixed premium, a cash value and a death benefit that can fluctuate based on investment performance? A. Annually renewable term. B. Variable renewable term. C. Variable whole life. D. Variable lifetime annuity.
C. Variable whole life
Which one of the following statements concerning whole life insurance is false? A. Level-premium whole life insurance accumulates a cash value that eventually reaches the face value of the policy at age 100 - 120. B. Whole life insurance offers permanent protection throughout the insured's lifetime. C. Whole life insurance can be participating, which means the insured must participate in self-directed investments for the cash value D. Whole life insurance premiums paid throughout the insured's lifetime are ordinary life policies.
C. Whole life insurance can be participating, which means the insured must participate in self-directed investments for the cash value
Diane, an ER surgeon, buys a disability policy with a base benefit of $6,000 and an SIS offset benefit of $1,200. Diane becomes disabled and eventually receives $1,000 in Social Security disability benefits. How much will she receive from the insurance company initially? A) $4,800. B) $6,000. C) $6,200. D) $7,200.
D) $7,200
COBRA coverage is available for which of the following persons? 1. A retiring employee. 2. An employee who is terminated. 3. Spouses and dependents of a deceased employee. 4. An employee no longer able to work due to disability. A) 3 only. B) 3 and 4. C) 1, 2, and 3. D) 1, 2, 3, and 4
D) 1, 2, 3, and 4
In which of the following events would COBRA rules apply for the benefit of the covered employee, employee's spouse, or dependent child? 1. The death of the covered employee. 2. The covered employee is fired for incompetence. 3. The employee changes status from full-time to part-time and, as a result, loses coverage. 4. The covered employee gets a divorce A) 1 only B) 1 and 4 C) 2, 3, and 4 D) 1, 2, 3, and 4
D) 1, 2, 3, and 4.
For Medicare beneficiaries, the maximum stay in a skilled nursing facility during a benefit period cannot exceed how many days? A) 20 days. B) 60 days. C) 90 days. D) 100 days
D) 100 days
A creditor makes a hard inquiry to a person's credit report. How long is the hard inquiry reported on the credit report for FICO score purposes? A) No effect. B) 6 months. C) 18 months. D) 24 months.
D) 24 months.
Brisco, now deceased, was married for 12 years. He had two dependent children, ages 10 and 12, who are cared for by their mother age 48. His mother, age 75, was his dependent and survived him. At the time of his death, he was currently but not fully insured under Social Security. His dependents are entitled to all of the following benefits except: A) A lump-sum death benefit of $255. B) A children's benefit equal to 75% of Brisco's PIA. C) A caretaker's benefit for the children's mother. D) A parent's benefit.
D) A parent's benefit.
Resident family members are covered for the purposes of Part A (Liability Coverage) for a Personal Auto Policy when operating all of the following except: A) Their auto. B) A rented auto. C) A borrowed auto. D) A replacement auto after 31 days.
D) A replacement auto after 31 days.
All of the following statements concerning the Social Security system are correct except: A) If a worker receives retirement benefits based on his own earnings record, the worker's retirement benefits will continue whether married or divorced. B) Widows and widowers, whether divorced or not, will continue to receive survivors' benefits upon remarriage if the widow or widower is age 60 or older. C) By providing the name of a country or countries to be visited and the expected departure and return dates, the Social Security Administration will send special reporting instructions to the beneficiaries and arrange for delivery of checks while abroad. D) A special one-time payment of $1,000 may be made to a deceased worker's spouse or minor children upon death.
D) A special one-time payment of $1,000 may be made to a deceased worker's spouse or minor children upon death.
The risk that individuals of higher than average risk will seek out or purchase insurance policies is called? A) Peril. B) Hazard. C) Law of Large Numbers. D) Adverse Selection.
D) Adverse Selection.
Which of the following statements about annuities is not correct? A) Term certain and joint life terms are not mutually exclusive. B) Variable annuities can be invested in sub-accounts that invest in fixed income securities C) The annuity benefit payments for a 20-year term certain will be more than the annuity payment for a single life annuity with a 20-year term certain option for an annuitant whose life expectancy is 20 years D) All annuities are subject to minimum distribution rules
D) All annuities are subject to minimum distribution rules
Tax qualified long-term care insurance policies must offer all of the following features, provisions, or options except: A) Guaranteed renewable. B) Option to purchase policy that increases with inflation. C) A non-forfeiture option. D) An option to purchase skilled nursing care coverage only.
D) An option to purchase skilled nursing care coverage only.
Which of the following would not be considered an insured person for the purposes of Part A (Liability Coverage) for a Personal Auto Policy? A) You. B) Any family member. C) Any person using "your covered auto" with permission. D) Any person using "your covered auto" without permission.
D) Any person using "your covered auto" without permission.
Credit agencies do not collect any of the following information for credit reports except: A) Home ownership. B) Employment information. C) Bank accounts with over withdrawals. D) Child support payments in arrears.
D) Child support payments in arrears.
All of the following statements are correct regarding a Personal Auto Policy Part D (Coverage for Damage to Your Auto) coverage except: A) Collision applies when your car hits another vehicle. B) Comprehensive covers fire, theft, or vandalism. C) Collision covers damages to a borrowed or rented vehicle. D) Collision coverage includes contact with an animal or bird.
D) Collision coverage includes contact with an animal or bird.
Many disability policies that are provided on a group basis have a split definition. Which of the following describes such a definition? A) Disability will be defined based on the duties of the insured. B) Disability will be defined based on any occupation that the insured is qualified for based on experience or training. C) Disability will be defined based on the specific duties of the insured. D) Disability will be defined based on the duties of the insured for a period of time and then based on any occupation that the insured is qualified for based on experience or training.
D) Disability will be defined based on the duties of the insured for a period of time and then based on any occupation that the insured is qualified for based on experience or training.
What is the likely effect on the credit score given the following? Assume a 750 score to start. • Credit utilization this month 40%. • One new hard inquiry this month. • One new late payment report this month (30 days) A) Down 40 points. B) Down 50 points. C) Down 60 points. D) Down 80 - 82 points.
D) Down 80 - 82 points.
Bill, age 33, plans to retire at age 67. Bill is a consultant and his income varies widely on a monthly basis. Bill wants to invest in an annuity over his work life expectancy. Which of the following annuities is most suitable for Bill? A) Fixed premium, immediate annuity. B) Single premium, immediate annuity. C) Fixed premium, deferred annuity. D) Flexible premium, deferred annuity.
D) Flexible premium, deferred annuity.
A person receiving Social Security benefits under the age of 65 can receive earned income up to a maximum threshold without reducing Social Security benefits by the earnings test. Which of the following count against the earnings threshold? A) Dividends from stocks. B) Rental income. C) Pensions and insurance annuities. D) Gambling winnings.
D) Gambling winnings.
John, who has retired to Miami, decided to purchase a condominium unit on the beach. Which of the following homeowners policies would be most appropriate for John to purchase? A) HO-3. B) HO-4. C) HO-5. D) HO-6.
D) HO-6.
Roger has a disability policy with a 12-month elimination period. He was in a bizarre accident involving a crane falling on a building causing part of the building's exterior wall to fall on his van. He lost the use of both of his legs in the accident. If his policy has a presumptive total disability coverage provision, when will he begin receiving benefits? A) Immediately. B) After six months as the provision accelerates the waiting period. C) After a one month statutory administrative time period. D) He will have to wait the 12 months
D) He will have to wait the 12 months
What is/are the key factors in determining the need for long-term care? A) A disabling accident. B) An acute episode. C) Multiple chronic conditions. D) Inability to perform activities of daily living
D) Inability to perform activities of daily living
At the age of 40, Kennedy deposited $50,000 in a nonqualified, single-premium deferred annuity. Tens years later, she surrenders the contract for a lump-sum distribution of its $100,000 value. Which of the following statements is correct? A) Kennedy will owe taxes on $50,000 B) Kennedy will owe taxes on the full $100,000 C) Kennedy will owe taxes and a 10% penalty on the full $100,000 D) Kennedy will owe taxes and a 10% penalty on $50,000
D) Kennedy will owe taxes and a 10% penalty on $50,000
What is the primary function of long-term care insurance? A) Pay claims for the insured. B) Underwrite long-term care policies. C) Provide comprehensive coverage. D) Protect against catastrophic risks
D) Protect against catastrophic risks
Credit agencies do not collect any of the following information for credit reports except: A) Employment information. B) Age of borrower. C) Amount of alimony paid. D) Tax lien.
D) Tax lien.
All of the following statements are correct regarding a personal liability umbrella policy except: A) The PLUP provides protection above and beyond the liability limits of your homeowners and automobile insurance policies. B) The PLUP requires the insured to carry certain underlying minimum amounts of liability for homeowners and PAP. C) The PLUP insurer provides legal defense to the insured. D) The PLUP is only appropriate for individuals with a high net worth.
D) The PLUP is only appropriate for individuals with a high net worth.
Which of the following most accurately describes the criteria required for an insured to qualify for long-term care benefits for a qualified plan under the Health Insurance Portability and Accountability Act? A) The insured is unable to perform two of the six ADLs for 90 days. B) The insured has substantial cognitive impairment requiring substantial assistance. C) The insured must meet both a and b. D) The insured may qualify by meeting either a or b
D) The insured may qualify by meeting either a or b
When utilizing the needs approach in the determination of the amount of life insurance, which factors should be considered? 1. The family expenses that will remain after the wage earner dies. 2. The value of the wage earner's life in the event he or she dies. 3. The income that can be generated by the surviving spouse. 4. The number of dependents. A. 1 only B. 3 only C. 1, 2, & 3 D. 1, 3, & 4
D. 1, 3, & 4
Watson, Inc. has four equal partners. All four partners are interested in entering into a buy-sell arrangement. How many life insurance policies would be purchased to properly fund using a crosspurchase agreement? A. 4 policies B. 6 policies C. 8 policies D. 12 policies
D. 12 policies
Which of the following method(s) is/are appropriate to evaluate a person's life insurance needs? 1. The human life approach to evaluate life insurance needs takes into consideration the income replacement needs of a person's survivors including income during the readjustment period, income to widow(er), and educational funds for dependents. 2. The needs approach evaluates the estimated present value of income generated over a person's work-life expectancy that is needed and then adjusts for the expected consumption of the person and for taxes. A. 1 only. B. 2 only. C. 1 and 2. D. None of the above.
D. None of the above
Which one of the following statements concerning universal life insurance is false? A. The insured has the flexibility to adjust premiums, face value and cash value of the policy. B. The insured has flexibility without the investment responsibility of the cash value C. The cash value of the policy can be used to pay the premiums D. The death benefit of a universal life insurance policy is fixed
D. The death benefit of a universal life insurance policy is fixed
The blackout period is: A. The period of time immediately following the death of the wage earner. B. The period of time after the death of a wage earner when the family is adjusting to life without the individual. C. The period of time when the widow or widower and dependents receive Social Security benefits. D. The period of time when the dependents have reached age 18 and the spouse's Social Security retirement benefits have not started.
D. The period of time when the dependents have reached age 18 and the spouse's Social Security retirement benefits have not started.
A worker's AIME: A) Must be determined by converting actualy earnings into current dollars through an indexing factor B) Is determined from wage information over prior years' work C) Uses the highest 35 years of indexed earnings (for workers that worked at least that long) D) Yields an average amount of monthly earnings for all indexed years E) All of the above
E) All of the above
