Insurance Simulation Questions:

An accident/health policyholder has _____ days to return the policy and receive a full refund of premium.

10

Premature IRA distributions are assessed a penalty tax of:

10%

XYZ Company pays the entire premium for its group health plan. The MINIMUM percentage of eligible employees that must be covered is:

100%

What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?

50%

Three law partners form a Cross-Purchase Buy and Sell agreement. This agreement is funded with individual life insurance. How many total life policies are needed for this agreement?

6

The Commissioner may exempt an applicant from the licensing exam if an applicant has obtained any of the following designations, Except:

Chief Operating Officer

M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim?

Claim - deductible x % $2,200-$200 x 80% = $1,600

What is being delivered during a policy delivery?

Insurance contract to the proposed insured.

Which of the following BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accidental means" definition?

Less restrictive.

When an employee is terminated, which statement about a group term life conversion is true?

Policy proceeds will be paid if the employee dies during the conversion period.

Which of the following is True if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?

The account can be rolled into the surviving spouse's IRA.

A person insured under a health policy is required to give the insurance company a Notice of Claim within how many days after a covered loss?

Twenty days (20)

Which of the following is considered to be the time period after a health policy is issued, during which no benefits are provided for illness.

probationary period.

A term life insurance policy matures:

upon the insured's death during the term of the policy.

Basic Medical Expense Insurance:

has lower benefit limits than Major Medical insurance.

A cost of living rider gives the insured:

additional death benefits.

Which statement is true regarding a minor beneficiary?

Normally, a guardian is required to be appointed in the Beneficiary clause of the contract.

Under what condition may a lender require the purchase of insurance as a condition of making a loan?

Only if the borrower is not restricted in his/her choice of insurers.

An agent completes an application with a client for a $50,000 Life Insurance policy. At what point is the Latest a Policy Summary and Buyers Guide must be given to the applicant?

Upon policy delivery.

At what point does a Whole Life Insurance policy endow?

When the cash value equals the death benefit.

An agent must complete ________ biennial continuing education credit hours to maintain his/her license.

24

Which of these is NOT a reason for a business to buy key person life insurance?

A pension deficiency if the key employee dies.

Which of the following statements is correct regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?

All proceeds are income tax free in the year they are received.

In a viatical settlement, how much does the policyowner receive for a life insurance policy?

Amount less than the death benefit.

P is a 40-year woman and would like to purchase an annuity that will provide a lifetime income stream beginning at 60-years old. Which of the following did she NOT buy?

An immediate annuity.

Traditional individual retirement annuity (IRA) distributions must start by:

April 1st of the year following the year the participant attains age 70 1/2.

The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n):

Closed panel

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?

Collect initial premium along with a signed health statement.

Which of the following reimburses it's insureds for covered medical expenses?

Commercial Insurers.

_______ could have claim to viatical settlement proceeds.

Creditors.

Which of the following does Social Security NOT provide benefits for?

Dismemberment. Social Security provides for all of these types of benefits EXCEPT dismemberment. (Survivorship, Disability, Retirement)

Which of the following Nonforfeiture options offers the highest death benefit?

Extended term.

Which of these is considered a true statement regarding Medicaid?

Funded by both state and federal governments.

S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a:

High-deductible health plan. To be eligible for a Health Savings Account, an individual must be covered by a high-deductible health plan (HDHP), must not be covered by other health insurance (does not apply to accident insurance, disability, dental care, vision care, long-term care), must not be eligible for Medicare, and can't be claimed as a dependent on someone else's tax return.

All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT:

Income derived from the TSA is received income tax-free.

Which of the following health insurance policy provisions specifies the health care services a policy will provide?

Insuring clause.

How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed.

What type of life insurance are credit policies issued as?

Term. The type of insurance used is decreasing term, with the term matched to the length of the loan period (though usually limited to 10 years or less) and the decreasing insurance amount matched to the declining loan balance.

Which of the following is NOT regulated by the Insurance Information and Privacy Protection Act?

insurance regulators.

A policyowner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make the change permanent. Which type of designation would fulfill this need?

irrevocable.

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid:

mandatory income tax withholding on the transfer amount.

A Health Insurance Policy applicant unintentionally fails to list a previous visit to a neurologist. If the policy is issued and the insurer later decides to contest the policy, it must do so.....

within 2 years from the date of issue.