LIFE AND HEALTH

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Question 10 of 15 An insurer is preparing to pay disability income benefits to an insured. In order to prevent overinsurance, the insurer monitors the income of the insured before submitting payment. Which rule corresponds to this behavior? AOverinsurance prevention BIncome tracking CIncome monitoring phase DRelation of earnings to insurance

Question 11 of 15 Life expectancy is used in the calculation of which of the following? ALife settlements BCash values CExtended term DDividends

BHigh-deductible health plan HDHP

Question 11 of 15 To be eligible for a Health Savings Account, an individual must be covered by a AHealth plan with no deductible. BHigh-deductible health plan. CLow-deductible health plan. DNonqualified plan.

D Correct! Money borrowed from the cash value is not taxable. Policy loans can be repaid at any time, including surrender and death. An insurer can charge interest on outstanding policy loans.

Question 2 of 15 Which of the following is NOT true regarding policy loans? APolicy loans can be repaid at death. BAn insurer can charge interest on outstanding policy loans. CA policy loan may be repaid after the policy is surrendered. DMoney borrowed from the cash value is taxable.

C Must have dependents.

Question 3 of 15 In order to be eligible for group health insurance, all of these are conditions an employee must meet EXCEPT AMust be actively at work. BMust be a full-time employee. CMust have dependents. DMust be working in a covered classification.

Question 4 of 15 What is the minimum age for applying for a life settlement broker license? A18 B19 C21 D26

Question 3 of 15 If the annuitant dies during the accumulation period, who will receive the annuity benefits? AEstate BBeneficiary COwner DInsurance company

C Owner

Question 1 of 15 An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? ANothing B$50,000 C$100,000 D$200,000

C $100,000 Correct! In joint life policies, the death benefit is paid upon the first death only.

D Metal level classification

Question 1 of 15 Under the Affordable Care Act, which classification applies to health plans based on the amount of covered costs? AGuaranteed and nonguaranteed BGrandfathered and nongrandfathered CRisk classification DMetal level classification

Question 14 of 15 When must the Buyer's Guide be delivered to the proposed insured? AAt policy delivery BAt the time the first premium is paid CAt the time the appointment is set for the first presentation DAt the time of application

D-At the time of application

B Are subject to vesting requirements.

Question 11 of 15 Employer contributions made to a qualified plan AAre taxed annually as salary. BAre subject to vesting requirements. CMay discriminate in favor of highly paid employees. DAre after-tax contributions.

Question 6 of 15 Representations are written or oral statements made by the applicant which AAre immaterial to the actual acceptability of the insurance contract. BAre considered true to the best of the applicant's knowledge. CAre guaranteed to be true. DAre found to be false after further investigation.

B Are considered true to the best of the applicant's knowledge. Correct! Representations are statements made by an applicant which they believe to be true.

Question 13 of 15 A Waiver of Premium provision may be included with which kind of health insurance policy? ABasic medical BHospital indemnity CDread Disease DDisability Income

Question 7 of 15 Which of the following is TRUE for both equity indexed annuities and fixed annuities? ABoth are considered to be more risky than variable annuities. BThey invest on a conservative basis. CThey have a guaranteed minimum interest rate. DThey are both tied to an equity index.

C They have a guaranteed minimum interest rate.

Question 5 of 15 When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A-Personal. B-Unilateral. C-Conditional. D-Aleatory.

C-Conditional. Correct! The contract is formed on the basis that certain conditions are met.

Question 9 of 15 According to the Coordination of Benefits (COB) provision in health insurance in this state, if insurer overpaid on a claim, the insurer may recover the excess from all of the following EXCEPT AThe Insurance Guaranty Association. BThe other insurer. CAnother organization involved in the claim. DThe person to whom the benefit has been paid.

Question 10 of 15 Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation? ALump-sum approach BHuman life value approach CNeeds approach DBlackout approach

B Human life value approach Human life value approach is determined by the loss of income that would result with the death of the insured, after making adjustments for expenses, inflation, etc.

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of A-Fraud. B-Breach of warranty. C-Concealment. D-Waiver.

C-Concealment. In insurance, concealment is the withholding of information that will result in an imprecise underwriting decision.

Question 11 of 15 If an insured changes his payment plan from monthly to annually, what happens to the total premium? ADoubles BIncreases CDecreases DStays the same

C-Decreases Because the insurer would have the entire premium to invest for a full year, they would reduce the premium amount.

Question 15 of 15 Which of the following best describes gross annual premium? ABasic insurance rate plus commissions BExpense premium CNet premium plus expenses DAnnual loading

C-Net premium plus expenses

Question 1 of 15 Which of the following is NOT an example of a business use of Life Insurance? A-Buy-sell Funding B-Executive Bonuses C-Key Person D-Workers Compensation

D-Workers Compensation Workers Compensation is a benefit payable when a worker is injured by a work-related injury, regardless of fault or negligence. It is not considered a business use of insurance.

Question 7 of 15 An applicant for insurance misstates her age at the time her life insurance application is taken. This misstatement may result in AAdjustment in the death benefit. BNo change. CAutomatic lapse. DRecession of the policy.

A Adjustment in the death benefit. In the event of the insured's death, the policy death benefit would be adjusted to equal the amount the premium paid would have purchased at the correct age, as long as the insured's correct age did not exceed the policy's maximum age.

Question 9 of 15 All of the following statements are correct regarding Credit Life Insurance EXCEPT ABenefits are paid to the borrower's beneficiary. BThe amount of insurance permissible is limited per borrower. CPremiums are usually paid by the borrower. DBenefits are paid to the creditor.

A Benefits are paid to the borrower's beneficiary. In Credit Life Insurance, the creditor is the beneficiary for the amount of benefit equal to the outstanding balance of the loan.

Question 1 of 15 All of the following are true of an annuity owner EXCEPT AThe owner must be the party to receive benefits. BThe owner pays the premiums on the annuity. CThe owner has the right to name the beneficiary. DThe owner is the party who may surrender the annuity.

A The owner must be the party to receive benefits.

Question 4 of 15 An agent selling variable annuities must be registered with AFINRA. BDepartment of Insurance. CThe Guaranty Association. DSEC.

A- FINRA. Because variable annuities are considered to be securities, a person must be registered with the FINRA (formerly NASD) and hold a securities license in addition to a life agent's license in order to sell variable annuities.

Question 2 of 15 An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay to its policyholders? A2% B2.5% C3% DWhatever interest rate the company deems appropriate

B 2.5% Insurance companies promise guaranteed minimums on the fixed annuities (2.5% in this scenario). This means that if the investments draw less than that, the company will have to pay 2.5% anyway. If the investments earn over 2.5%, the company will pay that excess.

Question 2 of 15 Which of the following types of agent authority is also called "perceived authority"? AFiduciary BApparent CExpress DImplied

B Apparent authority (also known as perceived authority) is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Question 13 of 15 Which of the following is TRUE of a qualified plan? AIt may allow unlimited contributions. BIt has a tax benefit for both employer and employee. CIt does not need to have a vesting schedule. DIt may discriminate in favor of highly paid employees.

B It has a tax benefit for both employer and employee. A qualified plan is approved by the IRS, which then gives both the employer and employee benefits in deductibility of contributions and tax deferral of growth.

Question 2 of 15 All of the following are beneficiary designations EXCEPT APrimary. BSpecified. CTertiary. DContingent.

B Specified. Beneficiary designations determine the order in which benefits will be paid: primary or contingent, which includes secondary and tertiary.

Question 10 of 15 For a retirement plan to be qualified, it must be designed for the benefit of AEmployer. BIRS. CEmployees. DKey employee.

C Employees.

Question 14 of 15 Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? AAnnuitization period BPay-out period CLiquidation period DDepreciation period

D Depreciation period Correct! The "annuitization period" is the time during which accumulated money is converted into an income stream. It is also referred to as the annuity, liquidation or pay-out period.

Question 11 of 15 Circulating deceptive sales material to the public is what type of Unfair Trade Practice? ACoercion BMisrepresentation CFalse advertising DDefamation

D Renewal provision

Question 15 of 15 Which health insurance provision describes the insured's right to cancel coverage? APolicy duration provision BInsuring clause CCancellation provision DRenewal provision

D Rates by class On a guaranteed renewable health insurance policy, the insurer may increase premiums on a class basis only and not on an individual policy.

Question 7 of 15 Insurers may change which of the following on a guaranteed renewable health insurance policy? ACoverage BIndividual rates CNo changes are permitted. DRates by class

C The individual insured

Question 14 of 15 In a group policy, who is issued a certificate of insurance? AThe insurance company BThe employer CThe individual insured DThe health care provider

B An Outline of Coverage must be delivered at the time of application or upon delivery of the policy.

Question 3 of 15 At what point must an Outline of Coverage be delivered? AUpon delivery of the policy only BAt the time of application or upon delivery of the policy CAt any point up to 30 days after policy delivery DAt the time of application only

APercentage of participation

Question 9 of 15 Which of the following factors would be an underwriting consideration for a small employer carrier? APercentage of participation BClaims experience CHealth status DMedical history of the employees

Question 2 of 15 All of the following entities regulate variable life policies EXCEPT AThe Guaranty Association. BFederal government. CThe SEC. DThe Insurance Department.

A-The Guaranty Association. Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.

Question 12 of 15 For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become AMore active. BLarger. CSmaller. DOlder.

B-Larger. Correct! According to the law of large numbers, the larger a group becomes, the easier it is to predict losses. Insurers use this law in order to predict certain types of losses and set appropriate premiums.

Question 3 of 15 Events in which a person has both the chance of winning or losing are classified as A-Retained risk. B-Speculative risk. C-Insurable. D-Pure risk.

B-Speculative risk. Speculative risk involves the chance of gain or loss and is not insurable.

Question 13 of 15 The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as A-Implied warranty. B-Utmost good faith. C-Reasonable expectations. D-A warranty.

B-Utmost good faith. The insurer must be able to rely on the statements given by the insured in the application. The insured must be able to rely on the insurer's promise to pay covered losses.

Question 6 of 15 Which of the following types of insurance policies would perform the function of cash accumulation? AIncreasing term BWhole life CTerm life DCredit life

B-Whole life Correct! Life insurance is unique from other types of insurance in that it could perform the function of cash accumulation. Cash values are available in whole life policies.

Question 8 of 15 Regarding the taxation of Business Overhead policies, APremiums are not deductible, but benefits are deductible. BPremiums are not deductible, but expenses paid are deductible. CPremiums are deductible and benefits are taxed. DPremiums are not deductible and benefits are taxed.

C Premiums are deductible and benefits are taxed.

Question 2 of 15 Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? A-Assumed B-Express C-Implied D-Apparent

C-Implied Implied authority is not written in the agent's contract but is required in order for the agent to conduct business. Implied authority exists because not every single detail of an agent's authority can be written in a contract.

Question 5 of 15 A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then AThe benefit is received tax free. BThe benefit is subject to the exclusionary rule. CIRS has no jurisdiction. DThe benefit is received as taxable income.

A-The benefit is received tax free.

Question 14 of 15 All of the following are business uses of life insurance EXCEPT AFunding business continuation agreements. BFunding against general company financial loss. CCompensating executives. DFunding against financial loss caused by the death of a key employee.

B-Funding against general company financial loss. Correct! Both life and health insurance can be used for a variety of purposes in a business setting, including the funding of business continuation agreements, compensating executives, and protecting the firm against financial loss resulting from the death or disability of key employees.

Question 8 of 15 Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? APremiums are taxable to the employee. BPremiums are not tax deductible as a business expense. CPremiums are tax deductible by the key employee. DPremiums are tax deductible as a business expense.

B-Premiums are not tax deductible as a business expense. The business cannot take a tax deduction for the expense of the premium. However, if the key employee dies, the benefits paid to the business are usually received tax free.

Question 2 of 15 The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? AAs of the application date BAs of the policy delivery date CAs of the first of the month after the policy issue DAs of the policy issue date

A-As of the application date

Question 10 of 15 If an agent fails to obtain an applicant's signature on the application, the agent must AReturn the application to the applicant for a signature. BSign the application for the applicant. CSign the application, stating it was by the agent. DSend the application to the insurer with a note explaining the absence of signature.

A-Return the application to the applicant for a signature. Correct! All applications must have the appropriate authorized signatures.

Question 15 of 15 Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance? ARace BAge CMedical history DSex

A Race

Question 10 of 15 The causes of loss insured against in an insurance policy are known as A-Perils B-Losses C-Risks D-Hazards

A-Perils Perils are the causes of loss insured against in an insurance policy.

Question 11 of 15 Which of the following is TRUE regarding the annuity period? AIt may last for the lifetime of the annuitant. BDuring this period of time the annuity payments grow interest tax deferred. CIt is also referred to as the accumulation period. DIt is the period of time during which the annuitant makes premium payments into the annuity.

A It may last for the lifetime of the annuitant. The "annuity period" is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.

Question 6 of 15 Which of the following applicants would NOT qualify for a Keogh Plan? ASomeone who works 400 hours per year BSomeone who has been employed for more than 12 months CSomeone who is over 25 years of age DSomeone who works for a self-employed individual

A Someone who works 400 hours per year Correct! A person must have worked at least 1,000 hours per year to be eligible for a Keogh Plan.

Question 7 of 15 Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? AUniversal Life - Option A BUniversal Life - Option B CEquity Indexed Universal Life DVariable Universal Life

A Universal Life - Option A Universal Life Option A (Level Death Benefit option) policy must maintain a specified "corridor" or gap between the cash value and the death benefit, as required by the IRS. If this corridor is not maintained, the policy is no longer defined as life insurance for tax purposes, and consequently loses most of the tax advantages that have been associated with life insurance.

Question 15 of 15 An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that? AInspection Report BMedical Information Bureau's report CAgent's Report DUnderwriter's Report

A-Inspection Report Correct! Inspection reports cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.

Question 11 of 15 All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? A Lower B Higher C As high D Half the amount

A-Lower Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a AWhole Life Policy. BConvertible Term Policy. CRenewable Term Policy. DDecreasing Term Policy.

B Convertible Term Policy. A convertible term policy has a provision that allows the policyowner to convert to permanent insurance.

Question 8 of 15 A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called APayor rider. BCost of living rider. CAccelerated benefit rider. DLiving need rider.

B Cost of living rider. A "cost of living" rider adjusts the face amount of a policy to maintain the relationship of the face amount and increases in the cost of living.

Question 13 of 15 Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? AAdditional insured rider BFamily term rider CSpouse rider DChildren's rider

B Family term rider Correct! A single rider that provides coverage on every family member is called a "family rider".

Question 9 of 15 All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT AUpon conversion, the premium for the permanent policy will be based upon attained age. BUpon conversion, the death benefit of the permanent policy will be reduced by 50%. CEvidence of insurability is not required. DMost term policies contain a convertibility option.

B Upon conversion, the death benefit of the permanent policy will be reduced by 50%. Correct! Convertible term insurance is convertible without proof of insurability up to the full term death benefit. However, upon conversion, the premium for the permanent policy will be based on the insured's attained age.

Question 13 of 15 Which of the following is true regarding the insurance amount in a credit life policy? AAllowable amount of coverage is determined by the State Insurance Commissioner. BThe amount of coverage can be greater than the amount owed. CCreditor can only insure the debtor for the amount owed. DCreditor may insure the debtor for an unlimited amount of coverage.

CCreditor can only insure the debtor for the amount owed. Correct! Credit life insurance cannot pay out more than the balance of the debt, so that there is no financial incentive for the death of the insured.

Question 10 of 15 Jack has a $20,000 life insurance policy on himself. He wants to insure the life of his 13 year old daughter. According to New York law, what is the maximum amount of life insurance he can purchase on his daughter? A$5,000 B$7,500 C$10,000 D$50,000

D $50,000 Incorrect! The limits for a minor under 14½ are $50,000 or 50% of the amount of insurance a person has on him/herself. $10,000 is 50% of $20,000, but Jack can purchase the greater amount of either $50,000 or 50%.

Question 14 of 15 An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) AKeogh Plan. BRoth IRA. CSEP. D403(b) Plan (TSA).

D 403(b) Plan (TSA). Under a 403(b) Plan, tax-sheltered annuities may be established for the employees of specified nonprofit charitable, educational, religious and other 501c(3) organizations, including teachers in public schools systems. Such plans generally are not available to other kinds of employees.

Question 4 of 15 According to the entire contract provision, what document must be made part of the insurance policy? ABuyer's Guide BAgent's report COutline of coverage DCopy of the original application

D Copy of the original application An insurance contract must contain a copy of the original application.

B Correct! The usual, customary and reasonable approach for determining insurance benefits is based upon the fees normally charged for specific procedures in the geographic location where the services are provided.

Languages: English Español Chapter: Medical Plans Question 2 of 15 A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as AGatekeepers. BUsual, customary and reasonable. CRelative-value schedule. DBenefit schedule.

Question 1 of 15 Any occupation disability typically means that an individual is unable to perform the duties of the occupation for which he/she is suited by all of these EXCEPT ATraining. BExperience. CPreference. DEducation.

Question 10 of 15 Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment? AInsurance Consumer Protectorate BInsurance Solvency Association CConsumer Protection Agency DInsurance Guaranty Association

B Catastrophic Care Benefit Plan

Question 12 of 15 What type of benefit plan for group health insurance will provide coverage in the event of a catastrophic illness or injury? ASmall Employer Group Plan BCatastrophic Care Benefit Plan CBasic Care Benefit Plan DCatastrophic Access

B The "exclusion ratio" is used to determine the annuity amounts that should be excluded from taxes. During the accumulation phase, the contributions to the annuity have already been taxed. Therefore, the contributions are not taxed during the income period.

Question 12 of 15 Which of the following is used to determine the annuity amounts that are not taxable? AMarket-adjusted annuities index BExclusion ratio CPro rata ratio DExclusion index

C Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for various business overhead expenses during a period of total disability. Expenses such as rent, utilities, and employee salaries are covered.

Question 15 of 15 A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability? ADisability buy-sell agreement BBusiness disability policy CBusiness overhead expense policy DKey person insurance

D Correct! The difference between the premiums paid and the cash value would be taxable. In this example, the difference between the premiums paid ($15,000) and the cash value ($18,000) is $3,000.

Question 15 of 15 An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable? A$50,000 B$18,000 C$15,000 D$3,000

D 65

Question 15 of 15 At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized? A55 B59 1/2 C62 D65

A 36 months The maximum period of coverage under COBRA is 36 months, in the event of the covered employee's death or divorce.

Question 15 of 15 What is the period of coverage for events such as death or divorce under COBRA? A36 months B60 days C31 days D12 months

DTalking

Question 15 of 15 Which of the following is NOT an activity of daily living (ADL)? AEating BDressing CBathing DTalking

C If an employer provides long-term group disability insurance for its employees, the benefit period may be limited to age 65, and benefits will be limited to 50% of the monthly wages for higher-paid employees and 66 and 2/3% of the monthly wages for lower-paid employees.

Question 4 of 15 If an employer provides long-term group disability insurance for its employees, what percentage of monthly wages are lower-paid employees eligible to collect? A33 and 1/3% B50% C66 and 2/3% D90%

A A contract that provides disability benefits must specify reasonable requirements as to the time, method and form of proof of disability (in other words, when and how an insured may prove a loss).

Question 5 of 15 According to the proof of loss provision, which of the following must be specified in a contract that provides disability benefits? AWhen and how an insured may prove a loss BHow a claim can be invalidated CA disclaimer that no benefits will be paid if proof of loss is not furnished DSpecific losses that are covered and not covered

C The ratio of the total investment in that contract to the expected return is developed to determine the portion of the annuity payment that will be taxable and nontaxable.

Question 9 of 15 What method is used to determine the taxable portion of each annuity payment? AThe annuity to age ratio BThe marginal tax formula CThe exclusion ratio DThe excise ratio

Question 3 of 15 Which of the following is NOT true about a group annuity? AIt can be owned by individual employees. BIt can be noncontributory. CIt can be qualified. DIt can be tax deferred.

A It can be owned by individual employees. Correct! Group annuity contracts can be obtained through an employer. Group annuities can be qualified, where an employer provides retirement benefits for employees through a tax-deferred annuity.

Question 14 of 15 Which of the following would NOT fall into the category of costs associated with death? AThe expense of a vacation for surviving family members BFuneral expenses CFinal medical expenses of the insured DDay to day expenses of maintaining the family

A-The expense of a vacation for surviving family members These costs would take into account the final medical expenses of the insured, funeral expenses, and day to day expenses of maintaining the family including rent or mortgage payments, car payments, utilities, groceries, etc.

Question 1 of 15 What is the minimum font size for a disclosure statement for a Medicare supplement insurance policy? A10 point B12 point C14 point D16 point

Question 11 of 15 Issue age policy premiums increase in response to which of the following factors? AIncreased deductible BInflation CAge DIncreased benefits

Question 1 of 15 An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n) AFlexible Annuity. BImmediate Annuity. CEquity Indexed Annuity. DVariable Annuity.

B HMOs have the option of providing one or more of the following supplemental benefits: long-term care, nursing services, home health care, prescription drugs, dental care, vision care, mental health care, and substance abuse services.

uestion 12 of 15 All of the following are considered to be supplemental benefits under an HMO plan EXCEPT APrescription drugs. BPreventive services. CLong-term care. DMental health care.

A Stock profit-sharing plans

uestion 13 of 15 Which of the following is monitored by ERISA? AStock profit-sharing plans BCash bonus plans CCash profit-sharing plans DSeverance pay of less than 2 years

Question 12 of 15 A producer who fails to segregate premium monies from his own personal funds is guilty of A-Larceny. B-Embezzlement. C-Theft. D-Commingling.

D-Commingling. it is illegal for insurance producers to commingle premiums collected from the applicants with their own personal funds.

D Every policy must offer nonforfeiture benefits to the applicant.

Languages: English Español Chapter: Long-Term Care (LTC) Insurance Question 9 of 15 Which of the following statements is true regarding LTC insurance? AEvery policy must offer reduced paid-up insurance to the applicant. BLTC policies may not include any riders. CLTC policies must allow a 60-day free-look period. DEvery policy must offer nonforfeiture benefits to the applicant.

BPlan A

Languages: English Español Chapter: Private Insurance for Senior Citizens and Special Needs Individuals Question 9 of 15 Which of the following must be present in all Medicare supplement plans? APlan C coinsurance BPlan A CForeign travel provisions DOutpatient drugs

Question 10 of 15 The insured's health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have? AAccidental Death BComprehensive CAccident-only DRestrictive

Question 11 of 15 If an individual is covered by a policy that includes an Accidental Death & Dismemberment rider, what term describes the maximum benefits he will receive if he loses sight in both eyes as a result of a fire? APrincipal sum BReciprocal amount CCapital sum DPercentage of full amount

B Life insurance proceeds to beneficiaries are passed free of federal income taxation if taken as a lump sum distribution. If the proceeds are taken as other than lump sum, part of the proceeds will be tax-free and part will be taxable. When paid in installments, part of the proceeds contains principal and some interest, so the interest portion is subject to federal income taxation.

Question 11 of 15 If taken as a lump sum, life insurance proceeds to beneficiaries are passed AWithout interest. BFree of federal income taxation. CTax-deductible. DPart tax-free and part taxable.

Question 11 of 15 In disability income insurance, the own occupation definition of disability applies AFor the first 2 years of a disability. BDuring the waiting period. CDuring the elimination period. DAs long as an individual is unable to work.

Question 12 of 15 All of the following are considered to be supplemental benefits under an HMO plan EXCEPT APrescription drugs. BPreventive services. CLong-term care. DMental health care.

C Deductible.

Question 12 of 15 On a major medical insurance policy, the amount that an insured must pay on a claim before the insurer will pay is known as AInside limit. BCoinsurance. CDeductible. DCopayment.

Question 12 of 15 The continuing education (CE) requirement in this state: ACannot be extended or waived under any circumstances. BApplies to life, annuity, and accident and health licensees only. CConsists of completing 15 hours of continuing education each biennium. DAllows agents to carry over excess CE hours to the next licensing period as long as it's for the same license.

Question 12 of 15 Which of the following refers to "own occupation" disability? AInsured is unable to perform duties of any occupation. BInsured business owner is unable to perform the duties of his/her own business. CInsured business owner is unable to perform the duties of any related business. DInsured is unable to perform duties of the occupation for which he/she was educated and trained.

B Correct! Hospital confinement indemnity policies pay specific amounts that depend on the amount of time the insured is confined to the hospital.

Question 13 of 15 A hospital indemnity policy will pay AAny expenses incurred by the stay in the hospital, minus coinsurance payments and deductibles. BA benefit for each day the insured is in a hospital. CIncome lost while the insured is in the hospital. DAll expenses incurred by the stay in the hospital.

B A Dread Disease Policy is a limited policy that is written to specifically cover cancer expense.

Question 13 of 15 Because of the history of cancer in her family, Julie purchased a policy that specifically covers the expense of treating cancer. Her policy would be classified as what type of policy? ATerm Health Policy BDread Disease Policy CFamily History Cancer Policy DSpecified Health Policy

Question 13 of 15 Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months? A12 months B24 months C30 months D36 months

A Correct! In key person disability insurance purchased by a business, the business is the applicant and the key person is the insured. When the policy is issued, the business is the policyowner and is responsible for paying the premiums.

Question 13 of 15 If a business wants to buy a disability income policy on a key employee, which of the following is considered the applicant? AThe employer BThe insurer CThe employee DThe producer

A The premiums paid for BOE insurance are tax deductible to the business as a business expense. However, the benefits received are taxable to the business as received.

Question 13 of 15 Regarding the taxation of Business Overhead policies, APremiums are deductible and benefits are taxed. BPremiums are not deductible and benefits are taxed. CPremiums are not deductible, but benefits are deductible. DPremiums are not deductible, but expenses paid are deductible.

Question 13 of 15 The Omnibus Budget Reconciliation Act of 1990 requires that large group health plans must provide primary coverage for disabled individuals under AAge 65 who are retired. BAge 59½ who are retired. CAge 65 who are not retired. DAge 59½ who are not retired.

Question 13 of 15 The person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract is the ALife settlement intermediary. BPolicyowner. CLife settlement broker. DLife settlement provider.

B Subscribers

Question 14 of 15 Which of the following are responsible for making premium payments in an HMO plan? APayors BSubscribers CProducers DInsureds

Question 14 of 15 Which of the following would an accident-only policy NOT cover? AAmputation of a leg that was burned during a house fire BSurgery to repair a wrist damaged by tendonitis. CHospitalization costs due to a boating accident DDeath from a motorcycle accident

A Disability benefit payments that are attributed to employee contributions are not taxable, but benefits payments that are attributed to employer contributions are taxable to the employee.

Question 15 of 15 In which of the following health plans are benefit payments attributed to employer contributions taxable to the employee? AGroup Disability Income BAD&D CDisability Buy Out DMedical Expense

B 30

Question 15 of 15 What is the maximum age for qualifying for a catastrophic plan? A26 B30 C45 D62

D Individual insurance does not require medical examinations, while group insurance does require medical examinations.

Question 2 of 15 All of the following are differences between individual and group health insurance EXCEPT AIn individual policies, the individual selects coverage options, while in a group plan all employees are covered for the same coverage which is chosen by the employer. BIndividual coverage can be written on an occupational or nonoccupational basis, while group plans cover only nonoccupational. CIndividual policies are renewable at the option of the insured, while group usually terminates when the individual leaves the group. DIndividual insurance does not require medical examinations, while group insurance does require medical examinations.

A6 months

Question 2 of 15 How long is an open enrollment period for Medicare supplement policies? A6 months B1 year C30 days D90 days

B Alzheimer's disease

Question 2 of 15 Long-term care insurance policies must cover which of the following? AInjuries caused by an act of war BAlzheimer's disease CAll mental disorders DTreatment of alcoholism

A 6 months to 2 years.

Question 3 of 15 Benefit periods for individual short-term disability policies will usually continue from A6 months to 2 years. B2 years to age 65. C1 week to 4 weeks. D3 months to 3 years.

Question 4 of 15 The Medicare supplement renewal commissions paid in the third year must be as high as the commission of which year? A1st B2nd C3rd D4th

D As long as the insured produces proof of loss as soon as possible, a claim for disability benefits will not be invalidated or reduced.

Question 4 of 15 What will happen if it is impossible for an injured insured to produce proof of disability in the time specified in a contract that provides disability benefits? AThe insured must submit to a doctor's examination before benefits will be paid. BThe insurance company has the right to cancel the policy. CAfter the deadline, benefits will be reduced by a percentage every week proof is not furnished. DClaims will be paid as contracted provided the proof is furnished as soon as possible.

Question 4 of 15 When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income? AInterest only BBoth principal and interest CNeither principal nor interest DPrincipal only

Question 4 of 15 Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled? ADisability Buy-Sell BProprietary Transfer CAbsolute assignment DTransfer of Ownership

AA-N

Question 4 of 15 Which of the following Medicare supplement plans would be available to a reasonably healthy 91-year-old female? AA-N BK & L only CA only DA-C only

Question 5 of 15 A policyholder is entitled to which of the following under an individual accident and health policy? AReturn of unearned premiums BRefusal of cancellation CReturn of earned premiums DExtension of renewal period

B The consideration clause specifies that both parties to the contract must give some valuable consideration. The payment of the premium is the consideration given by the applicant. Because the applicant had not paid an initial premium, she is not covered by insurance.

Question 5 of 15 An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the AEligibility Clause. BConsideration Clause. CInsuring Clause. DPre-existing Conditions Clause.

A During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other.

Question 5 of 15 An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer? A$10,000, no tax consequence B$8,000, no tax consequence C$8,000, tax on growth only D$10,000, tax on growth only

D Correct! An insurer is completely responsible for advertisements regarding its company, regardless of who creates, presents, or distributes the material.

Question 5 of 15 An insurer hires a representative to advertise its company at a local convention. The representative lies about the details of some of the policies, in an attempt to secure more business for the company. Who is responsible for the representative's claims? AThe representative BThe underwriters CThe agent DThe insurer

B Presumptive disability is a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.

Question 5 of 15 Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe? AResidual disability BPresumptive disability CDismemberment disability DPartial disability

A Correct! The cash value of a surrendered policy is only considered to be taxable as income if the cash value exceeds the amount of premiums paid for the policy.

Question 5 of 15 If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? AIt is only taxable if the cash value exceeds the amount paid for premiums. BIt is not considered to be taxable. CIt is taxable only if it exceeds the amounts paid for premiums by 50%. DIt is automatically taxable.

B Employees receive the pension and other benefits promised by their employers.

Question 5 of 15 The main purpose of ERISA is to ensure that AHigh quality care is available to all insured. BEmployees receive the pension and other benefits promised by their employers. CEmployees are able to extend group health coverage after termination of employment. DUniform policy terms and provisions are established for all insurers in all states.

Question 5 of 15 The person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract is the ALife settlement intermediary. BPolicyowner. CLife settlement broker. DLife settlement provider.

D Correct! Under HIPAA regulations, to be eligible to convert health insurance coverage from a group plan to an individual policy, the insured must have 18 months of continuous creditable health coverage.

Question 5 of 15 To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan? A5 years B12 months C63 days D18 months

C IRON

Question 5 of 15 Which of the following is NOT a metal level of coverage offered under the Patient Protection and Affordable Care Act? ASilver BBronze CIron DGold

Question 5 of 15 Which of the following is NOT among the goals of a Medicare supplement application? APresuming the applicant is eligible for Medicaid, based on the nature of the policy BDetermining whether or not an applicant has an existing Medicare supplement policy CDetermining whether or not the policy will replace another accident and health policy DAdvising applicants regarding the availability of counseling services

C Continuation provision

Question 5 of 15 Which of the following provisions must be included on the first page of a Medicare supplement policy, which states the insurer's right to change premium amounts? AInsurer's rights BCoverage limitations CContinuation provision DPremium provision

C Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class. Coverage is guaranteed, but rates can be adjusted for the entire class.

Question 6 of 15 A guaranteed renewable health insurance policy allows the APolicy to be renewed at time of expiration, but the policy can be canceled for cause during the policy term. BInsurer to renew the policy to a specified age. CPolicyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class. DPolicyholder to renew the policy to a stated age and guarantees the premium for the same period.

Question 6 of 15 If an agent fails to promptly remit the premiums collected from the insured to the insurer, the agent may be found guilty of which of the following? AFraud BEmbezzlement CControlled business DRebating

C If a firm or association is applying for a broker's license, they must name and authorize natural persons to act individually as life settlement brokers for the firm.

Question 6 of 15 If an association is applying for a life settlement broker's license, which of the following requirements must the association meet? AMaintain an active life license for at least 1 year BEstablish a board of directors CAuthorize a natural person to act individually as a broker DEmploy a minimum of 10 individual brokers

AThird-party administrator

Question 6 of 15 What is another name for an Administrative-Services Only arrangement? AThird-party administrator BA modified fully insured plan CModified endowment contract DSelf-funding

B Basic Coverage Benefit Plan

Question 6 of 15 What type of benefit plan is a managed plan that is developed in conjunction with the Health Benefit plan committee? AOpen Care Plan BBasic Coverage Benefit Plan CCatastrophic Coverage Benefit Plan DSmall Employee Carrier Plan

C Correct! Key person disability is purchased by the employer on the life of a key employee to cover the expense of hiring and training a replacement for the key person.

Question 6 of 15 What type of health insurance policy provides an employer with funds to train a replacement if a valued employee becomes disabled? ADisability Buy-Sell BBusiness Overhead CKey Person Disability DGroup Disability

B50%

Question 7 of 15 How many eligible employees must be included in a contributory health insurance plan? A100% B50% C75% D90%

B Correct! If $100,000 of life insurance proceeds were used in a settlement option paying $13,000 per year for 10 years, $10,000 per year would be income tax free (as principal) and $3,000 per year would be income taxable (as interest).

Question 7 of 15 If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually? A$7,000 B$3,000 C$13,000 D$10,000

Question 7 of 15 If taken as a lump sum, life insurance proceeds to beneficiaries are passed ATax-deductible. BPart tax-free and part taxable. CWithout interest. DFree of federal income taxation.

A Medicare is the secondary payer during the first 30 months of treatment.

Question 7 of 15 In cases where a covered employee is eligible for Medicare benefits to treat end-stage renal disease (ESRD) with dialysis or kidney transplant, which of the following is correct? AMedicare is the secondary payer during the first 30 months of treatment. BMedicare and the employer group insurance plan will share the cost equally. CBecause Medicare does not cover treatment of ESRD, the group plan will pay 100%. DMedicare is primary for the first 12 months of treatment and the employer group insurance is secondary.

C Income assistance for work-related injury

Question 7 of 15 Medicaid provides all of the following benefits EXCEPT AEyeglasses. BFamily planning services. CIncome assistance for work-related injury. DHome health care services.

B Individual tax deduction for premiums paid.

Question 7 of 15 The Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT ACoverage for preventive benefits. BIndividual tax deduction for premiums paid. CRight to appeal. DNo lifetime dollar limits.

C Most group disability income is nonoccupational coverage, covering insureds only off the job. The employer carries workers compensation for on the job injuries or sickness.

Question 7 of 15 The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called AOccupational coverage. BWorkers compensation. CNonoccupational coverage. DUnemployment coverage.

C Correct! Money collected with respect to an insurance transaction must be held in a position of trust by the agent or broker.

Question 7 of 15 The requirement that agents must account for all insurance funds collected and are not permitted to commingle those funds with their own funds without the express consent of the insurance company is known as AFiscal responsibility. BAccepted accounting principal. CFiduciary responsibility. DPremium accountability.

B It combines LTC insurance and Medicaid to help people prepare for nursing home care. The New York State Partnership for Long-Term Care is program that combines private long-term care insurance and Medicaid to help New Yorkers prepare financially for the possibility of needing nursing home or home care. The program allows New Yorkers to protect their assets while remaining eligible for Medicaid if their long-term care needs exceed the period covered by their private insurance policy.

Question 7 of 15 What is the purpose of the New York State Partnership for LTC? AIt provides Medicaid for people too young to qualify. BIt combines LTC insurance and Medicaid to help people prepare for nursing home care. CIt provides permanent in home nursing care for those who qualify, meeting age and health requirements. DIt provides public health care for children.

Question 7 of 15 What type of benefit helps to pay for accidental injuries that are not severe enough to qualify as disabilities? AAccidental Death & Dismemberment BMedical Reimbursement Benefit CPartial Disability DBasic Accidental Injury

A A settlement option is exercised when an immediate annuity is purchased with the face amount at death or with the cash value at surrender.

Question 8 of 15 If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a ASettlement option. BNontaxable exchange. CNonforfeiture option. DRollover.

B Disability benefits are paid to those who are unable to work as they normally would, due to an accident or illness. Benefits are designed to help the insured recover income lost as a result of the disability. The amount of benefits that an insured receives is determined by the insured's earned income and is usually limited to a certain percentage of that amount.

Question 8 of 15 Which benefits would a disability plan most likely pay? AMedical expenses associated with a disability BIncome lost by the insured's inability to work CRehabilitation costs DCopayments

B Only an executive officer of the company, not an agent, has authority to make any changes to the policy. The insurer must have the insured's written agreement to the change.

Question 8 of 15 Which of the following entities has the authority to make changes to an insurance policy? AProducer BInsurer's executive officer CDepartment of Insurance DBroker

A Correct! Partial disability covers full-time-working insureds who are unable to perform some, but not all, of their regular job duties or can no longer work full-time, which ultimately results in a loss of income. Payment from partial disability is typically 50% of the total disability benefit.

Question 8 of 15 Which of the following is NOT true regarding partial disability? AThis is a form of insurance that covers part-time workers. BThe insured can still report to work and receive benefits. CBenefit payments are typically 50% of the total disability benefit. DAn insured would qualify if he couldn't perform some of his normal job duties.

Question 8 of 15 Which of the following is true of a PPO? AClaim forms are completed by members on each claim. BNo copayment fees are involved. CIts goal is to channel patients to providers that discount services. DThe most common type of PPO is the staff model.

A It consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income.

Question 8 of 15 Which of the following statements is NOT true concerning Medicaid? AIt consists of 3 parts: Part A: hospitalization, Part B: doctor's services, Part C: disability income. BIt is a state program. CIt is funded by state and federal taxes. DIt is intended to provide medical assistance for certain categories of people who are needy.

B Correct! HMOs provide a package of comprehensive health care services that include routine physicals, immunizations, well baby care, family planning, etc., as well as the treatment of sickness and injury.

Question 9 of 15 Which of the following health care plans would most likely provide the insured/subscriber with comprehensive health care coverage? ABasic medical expense plan BHealth Maintenance Organization plan CGroup dental insurance plan DMedical-surgical expense plan

Question 9 of 15 Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital? ASurgical BBlanket CMedigap DIndemnity

B renew the policy until the insured has reached age 65. Correct! The guaranteed renewable provision is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. As with the noncancellable policy, coverage is generally not renewable beyond the insured's age 65.

uestion 13 of 15 When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees ATo renew the policy indefinitely. BTo renew the policy until the insured has reached age 65. CTo charge a lower premium every year the policy is renewed. DNot to change the premium rate for any reason.

Question 10 of 15 When an annuity is written, whose life expectancy is taken into account? AAnnuitant BBeneficiary CLife expectancy is not a factor when writing an annuity. DOwner

A Annuitant The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be.

Question 9 of 15 Which of the following is NOT true about a joint and survivor annuity benefit option? APayments stop after the first death among the annuitants. BA period certain option may be included. CThis option guarantees income for two or more recipients. DThe surviving annuitant may receive reduced payments.

A Payments stop after the first death among the annuitants. A joint and survivor annuity will pay until the last annuitant has died; however, the surviving annuitant may receive reduced payments.

Question 7 of 15 Which of the following is called a "second-to-die" policy? ASurvivorship life BFamily income CJuvenile life DJoint life

A Survivorship life Survivorship life (also referred to as "second-to-die" or "last survivor" policy) is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age.

Question 2 of 15 All of the following could own group life insurance EXCEPT AA debtor group. BA group needing low-cost life insurance. CA group sponsored by an employer. DAn alumni group.

B A group needing low-cost life insurance. Groups purchasing group life insurance must be formed for a reason other than purchasing insurance.

Question 14 of 15 Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be ADiscounted. BAdjusted to the insured's age at the time of renewal. CDetermined by the health of the insured. DBased on the issue age of the insured.

B Adjusted to the insured's age at the time of renewal. If a level term product is renewed at the end of the term period the premium will be based upon the attained age of the insured.

Question 14 of 15 Which of the following types of insurance policies is most commonly used in credit life insurance? AEquity indexed life BDecreasing term CIncreasing term DWhole life

B Decreasing term Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor. It is usually written as decreasing term insurance.

Question 7 of 15 Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die? AOrdinary Life BJoint Life CDecreasing Term DWhole Life

B Joint Life Correct! A Joint Life policy covering two lives would be the least expensive because the premiums are based on an average age, and it would pay a death benefit only at the first death.

Question 14 of 15 A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? AMedical exam and parents' medical history BProof of insurability is not required. CMedical exam DHer parents' federal income tax receipts

B Proof of insurability is not required. Correct! If a Children's Term rider is attached to a life insurance policy, children can be covered under the policy until they reach the maximum age stated in the policy. At that point, they can convert their coverage to a new policy without having to issue proof of insurability.

Question 15 of 15 An insured stops making payments on a loan taken from his cash value policy. What will most likely happen? AThe policy will be reduced to an extended term option. BThe policy will terminate when the loan amount with interest equals or exceeds the cash value. CThe insurer will increase the interest rate on the loan and charge a penalty. DThe insurer will not permit the policyowner to take out any more loans.

B The policy will terminate when the loan amount with interest equals or exceeds the cash value. Correct! In most policies, failure to pay back a loan will result in termination of the policy if the total amount of the loan and accrued interest equals the cash value.

Question 15 of 15 A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? AThe group has not been established for long enough. BThe purpose of the group was to purchase life insurance. CTheir profession poses too high of a risk for the insurer. DThere are not enough people in the group to qualify for group life insurance.

B The purpose of the group was to purchase life insurance. In order to qualify for small group life insurance, a group must be formed for a purpose other than attaining life insurance.

Question 15 of 15 Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings? A75% of employee's contributions are taxed. BThey are tax deferred until withdrawn. CTaxes must be paid in full. DEmployer's matching contribution can be 50% of employee's salary.

B They are tax deferred until withdrawn. Taxation is deferred on both contributions and earnings until funds are withdrawn.

uestion 4 of 15 The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? A$0 B$50,000 (50% of the policy value) C$100,000 D$300,000 (triple the amount of policy value)

C $100,000 The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur within 90 days of the accident. In this case, since the insured contributed to his own death, the triple indemnity rider is void, but the beneficiary will still receive the policy's death benefit.

Question 9 of 15 Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages? A7 B10 C3 D5

C 3 Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer can then contribute up to an amount equal to 3% of the employees' annual compensation. Contributions and earnings are both tax-deferred until funds are withdrawn.

Question 13 of 15 Which of the following statements about group life is correct? AThe group sponsor receives a Certificate of Insurance. BThe policy can be converted to an individual term insurance policy. CThe cost of coverage is based on the ratio of men and women in the group. DThe premiums are higher than in an individual policy because there is no medical exam.

C The cost of coverage is based on the ratio of men and women in the group. Group life insurance can be converted to an individual whole life, not a term, policy; the group life insurance premiums are usually lower than those of an individual policy; the group sponsor receives a master contract, while the participants receive certificates of insurance. The cost of the coverage is based on the average age of the group and the ratio of men to women. Review Content Next Question

Question 7 of 15 Who bears all of the investment risk in a fixed annuity? AThe beneficiary BThe annuitant CThe insurance company DThe owner

C The insurance company Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. Income payments do not vary from one payment to the next. The insurance company can afford to make guarantees because the money of a fixed annuity is placed in the general account of the insurance company, which is part of its investment portfolio. The company makes conservative enough investments to insure a guaranteed rate to the annuity owners.

Question 8 of 15 Which entity determines the amount of accelerated death benefits that will be paid to an insured? AFederal law BState law CThe insurer DEmployers offering plans that include accelerated death benefits

C The insurer

Question 1 of 15 In insurance, an offer is usually made when A-The agent hands the policy to the policyholder. B-An agent explains a policy to a potential applicant. C-The completed application is submitted. D-The insurer approves the application and receives the initial premium.

C-The completed application is submitted.

Question 14 of 15 A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? ASurvivorship Life Policy BSecond-to-Die CFamily Income Policy DJoint Life Policy

D Joint Life Policy Correct! Joint life policies cover the lives of two insureds; rates are blended. Upon the death of the first insured, the policy ends. Review Content Next Question

Question 9 of 15 Which Universal Life option has a gradually increasing cash value and a level death benefit? A Juvenile life B Term insurance C Option B D Option A

D Option A Incorrect! Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

Question 1 of 15 Which of the following information about the applicant is NOT included on Part 1 of the application for insurance? AMarital status BMedical background CGender DOccupation

B-Medical background

Question 5 of 15 Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? AThe employer is the owner and the key employee is the beneficiary. BThe key employee is the owner and beneficiary. CThe key employee is the owner and the employer is the beneficiary. DThe employer is the owner and beneficiary.

D-The employer is the owner and beneficiary.

Question 6 of 15 Which of the following is NOT the consideration in a policy? A-The application given to a prospective insured B-Something of value exchanged between parties C-The premium amount paid at the time of application D-The promise to pay covered losses

A-The application given to a prospective insured Consideration is something of value that is transferred between the two parties to form a legal contract.

Question 1 of 15 If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be A-Approved. B-Authorized. C-Certified. D-Qualified.

B-Authorized. Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer.

Question 4 of 15 Which of the following is NOT required on an illustration used in the sale of a life insurance policy? A-Underwriting or rating classification upon which the illustration is based B-The name of the primary and secondary beneficiaries C-Generic name of policy D-Name of insurer

B-The name of the primary and secondary beneficiaries

Question 4 of 15 Joe, Larry, and Curly own a small business. They have made a legal arrangement which states that if one of them dies or becomes disabled, the other two will be able to buy the partner's shares. Which term best describes this arrangement? ABusiness Continuation BShares Distribution CBusiness Partner Disability Provision DBuy-up Distribution

A-Business Continuation Correct! In a Business Continuation arrangement, the partners of a business can buy shares belonging to a recently deceased or disabled partner.

Question 4 of 15 In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium? AIt will likely be higher because the applicant is a substandard risk. BIt will likely be the average premium issued to standard risks. CThe applicant's habits and health do not affect the premiums. DIt will likely be lower because the applicant is a preferred risk.

A-It will likely be higher because the applicant is a substandard risk. Correct! Applicants are considered substandard risks because of physical condition, personal or family history of disease, occupation, or dangerous habits. Substandard risks are usually issued a higher premium than standard risks.

Question 14 of 15 When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would ALower the insured's premium. BShorten the contestability period. CEliminate pre-existing conditions. DHelp him meet a sales quota for that period.

A-Lower the insured's premium. An agent may backdate an application for up to 6 months to accomplish a lower premium rate for the insured.

Which statement regarding insurable risks is NOT correct? A-An insurable risk must involve a loss that is definite as to cause, time, place and amount. B-Insureds cannot be randomly selected. C-Insurance cannot be mandatory. D-The insurable risk needs to be statistically predictable.

B-Insureds cannot be randomly selected. Granting insurance must not be mandatory, selecting insureds randomly will help the insurer to have a fair proportion of good risks to poor risks. All other statements are true.

Question 1 of 15 What is the purpose of a conditional receipt? AIt serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company. BIt is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue. CIt is intended to provide coverage on a date earlier than the date of the issuance of the policy. DIt guarantees the applicant that a policy will be issued in the amount applied for in the application.

C-It is intended to provide coverage on a date earlier than the date of the issuance of the policy. Coverage commences on the date of the application or the date of a medical examination, whichever is later, on the condition that the applicant is determined to be insurable at the rate applied for.

Question 5 of 15 In terms of Social Security, what is the name for the time period after the youngest child of a family turns 16 and before the surviving spouse may start receiving retirement benefits? ABlackout period BNonpayment interval CBenefit reduction DAccumulation period

A-Blackout period Blackout period begins when the youngest child reaches the age of 16, and ends when the surviving spouse qualifies for retirement benefits, as early as age 60. No benefits are paid during this time.

Question 8 of 15 An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day, AThe premium would be returned to the insured's estate because the policy was not issued. BThe company could reject the death claim because the underwriting process was never completed. CThe company could reject the application on the basis that the insured's death was not caused by an ongoing medical problem. DThe beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for.

D-The beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for.

Question 9 of 15 All of the following are true of key person insurance EXCEPT AThere is no limitation on the number of key employee plans in force at any one time. BThe employer is the owner, payor and beneficiary of the policy. CThe key employee is the insured. DThe plan is funded by permanent insurance only.

D-The plan is funded by permanent insurance only.

Question 14 of 15 Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT AThe loss produced by the risk must be definite. BThe loss may be intentional. CThe loss must not be catastrophic. DThere must be a sufficient number of homogeneous exposure units to make losses reasonably predictable.

B-The loss may be intentional. To insure intentional losses would be against public policy.

Question 3 of 15 An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? AShe can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan. BShe will still be covered under the group plan, but will have to pay an individual policy premium. CShe can only convert her coverage without proof of insurability if she has the master policy. DShe must apply for a new policy, which requires her to provide proof of insurability.

A-She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan. a person has life insurance under a group plan and then leaves the group, he/she may convert group coverage to individual coverage within 31 days of leaving the plan without proof of insurability.

Question 13 of 15 An insurance company sells an insurance policy over the phone in response to a TV ad. Which of the following best describes this act? AIndependent agency marketing BIllegal CInsurance telemarketing DDirect response marketing

D-Direct response marketing Correct! A direct response marketing system effectively bypasses the insurance agent. Business is conducted over the phone, through the mail, or online. This is a perfectly legal approach to selling insurance. It is not mandatory in all situations for the insured to physically sign any documents in order for coverage to go into effect.

Question 9 of 15 During replacement of life insurance, a replacing insurer must do which of the following? ASend a copy of the Notice Regarding Replacement to the Department of Insurance BObtain a list of all life insurance policies that will be replaced CGuarantee a replacement for each existing policy DDesignate a new producer for a replaced policy

B-Obtain a list of all life insurance policies that will be replaced The replacing insurance company must require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.

Question 1 of 15 Which services are associated with Standard & Poor's and AM Best? A-Storing medical information collected by insurance companies B-Rating the financial strength of insurance companies C-Investigating violations of The Fair Credit Reporting Act D-Providing employment histories for investigative consumer reports

B-Rating the financial strength of insurance companies Correct! Reports generated by Standard & Poor's and AM Best help prospective consumers to judge the financial security of various insurance companies.

Question 5 of 15 An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? ADeferred BFixed CFlexible premium DImmediate

A Deferred Correct! Deferred annuities may be purchased with either a single lump sum or periodic payments, but they do not begin the income payments until sometime after 1 year from the date of purchase.

Question 11 of 15 A rider attached to a life insurance policy that provides coverage on the insured's family members is called the AOther-insured rider. BChange of insured rider. CJuvenile rider. DPayor rider.

A Other-insured rider. Correct! The other-insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert to permanent insurance.

Question 8 of 15 In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? AThe annuitant will receive the higher of either the guaranteed minimum rate or current rate. BThe annuitant will always receive the current interest rate. CThe annuitant will receive the lower of either the guaranteed minimum rate or current rate. DThe annuitant will only receive the guaranteed minimum specified in the contract.

A The annuitant will receive the higher of either the guaranteed minimum rate or current rate. With a fixed annuity, the insurer invests the principal and gives the annuitant a guaranteed interest rate based on a minimum rate specified in the annuity, or current interest rate, whichever is higher.

Question 3 of 15 A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to AThe insured's estate. BThe insured's firstborn child. CBoth children who share equally on a per-capita basis. DThe insurance company.

A The insured's estate. Correct! Because there is no viable beneficiary at the time of death, proceeds are paid to the insured's estate.

Question 7 of 15 Which of the following is NOT true regarding a Certificate of Authority? A-It is issued to group insurance participants. B-It may be necessary for transacting business in a specific state. C-It is equivalent to an insurance license. D-It is issued by the state department of insurance.

A-It is issued to group insurance participants. Before insurers may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.

Question 7 of 15 The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the AComplete contract. BEntire contract. CTotal contract. DAleatory contract.

B Entire contract. The policy, together with the attached application, constitutes the entire contract. This provision limits the use of evidence other than the contract and the attached application in a test of the contract's validity. This is a mandatory provision in life insurance.

Question 12 of 15 All of the following statements about equity index annuities are correct EXCEPT AThey invest on a more aggressive basis aiming for higher returns. BThe annuitant receives a fixed amount of return. CThey have a guaranteed minimum interest rate. DThe interest rate is tied to an index such as the Standard & Poor's 500.

B The annuitant receives a fixed amount of return. Equity indexed annuities have a guaranteed minimum interest rate, so while they are aggressive in nature, the annuitant will not have to worry about receiving less than what the minimum interest rate would yield.

Question 4 of 15 The annuity owner dies during the accumulation period of his annuity. The cash value of his annuity exceeds the premiums he paid. There is no named beneficiary. Which of the following is true? AThe state government will receive the cash value of the annuity. BThe cash value will be paid to the annuitant's estate. CThe premium value will be paid to the annuitant's estate. DThe state government will receive the amount of premiums paid.

B The cash value will be paid to the annuitant's estate. If an annuitant dies during the accumulation period, the beneficiary is paid either the cash value of the policy or the amount of premiums paid, whichever is the larger amount. In this case, a beneficiary is not named, so the cash value will be paid to the annuitant's estate.

Question 2 of 15 Which of the following are generally NOT considered when underwriting group insurance? AThe size of the group BThe insureds' medical history CThe nature of the group DThe group's past claim experience

B The insureds' medical history Group life insurance is written on a group, not individual basis. Each individual completes an application that identifies the participant and beneficiary. Then, the group is judged based on its nature and past claim experience. Generally, medical questions are not necessary.

Question 3 of 15 All of the following are TRUE statements regarding the accumulation at interest option EXCEPT AThe policyholder has the right to withdraw the accumulations at any time. BThe interest is not taxable since it remains inside the insurance policy. CThe annual dividend is retained by the company. DThe interest is credited at a rate specified by the policy.

B The interest is not taxable since it remains inside the insurance policy. The interest credited under this option is TAXABLE, whether or not the policyowner receives it.

uestion 5 of 15 A Straight Life policy has what type of premium? AA variable annual premium for the life of the insured BA level annual premium for the life of the insured CAn increasing annual premium for the life of the insured DA decreasing annual premium for the life of the insured

B-A level annual premium for the life of the insured Straight Life policies charge a level annual premium for the lifetime of the insured and provide a level, guaranteed death benefit.

Question 5 of 15 The law states that an insurer is allowed to pay the entire Death Benefit to the insured if they qualify to use the Accelerated Death Benefit Rider; however, most insurers limit the amount of the Death Benefit paid to A75% B30% C50% D60%

C 50% While the law technically allows an insurance company to advance the entire death benefit, most carriers impose their own cap, such as 50% of the death benefit.

Question 12 of 15 What is the advantage of reinstating a policy instead of applying for a new one? AThe face amount can be increased BThe cash values have gained interest while the policy was lapsed CThe original age is used for premium determination DProof of insurability is not required

C The original age is used for premium determination The reinstatement provision allows the policyowner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. If the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status.

Question 5 of 15 Which of the following best defines target premium in a universal life policy? AThe minimum amount to make sure the policy is annually renewable BThe corridor of insurance CThe recommended amount to keep the policy in force throughout its lifetime DThe maximum amount the policyowner may pay on a policy

C The recommended amount to keep the policy in force throughout its lifetime The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

Question 3 of 15 Which is true about a spouse term rider? AThe rider is decreasing term insurance. BCoverage is allowed up to age 75. CThe rider is usually level term insurance. DCoverage is allowed for an unlimited time.

C The rider is usually level term insurance. Correct! The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.

Question 11 of 15 How are contributions to a tax-sheltered annuity treated with regards to taxation? AThey are taxed as income for the employee. BThey are taxed as income for the employee, but are tax free upon withdrawal. CThey are not included as income for the employee, but are taxable upon distribution. DThey are never taxed.

C They are not included as income for the employee, but are taxable upon distribution.

Question 6 of 15 What is the purpose of a fixed-period settlement option? ATo provide a guaranteed income for life BTo provide a guaranteed amount of money each month CTo provide a guaranteed income for a certain amount of time DTo settle the insurance company's liability

C To provide a guaranteed income for a certain amount of time When the fixed-period installments option is selected, the insurer agrees to pay the proceeds in equal installments over a specified period of time.

Question 10 of 15 Which is TRUE about the cash surrender nonforfeiture option? AAfter the cash surrender, the insured is covered for a grace period of 1 month. BThe policy remains active for some time after the policyholder opts for cash surrender. CThe policyholder receives the original cash value of the policy. DFunds exceeding the premium paid are taxable as ordinary income.

D Funds exceeding the premium paid are taxable as ordinary income. The insurers surrender the policy at its current cash value. Only any excess of value is taxable as income. Once the policyholder opts for cash surrender, the policy is immediately inactive.

Question 10 of 15 The automatic premium loan provision is activated at the end of the AFree-look period BElimination period. CPolicy period. DGrace period.

D Grace period. Provided there is sufficient cash value in the policy, this provision triggers a loan at the end of the grace period to keep a policy in force.

Question 11 of 15 An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? ADividend options BGuaranteed renewable option CNonforfeiture options DGuaranteed insurability option

D Guaranteed insurability option The guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.

Question 6 of 15 A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits? AVariable annuity BFlexible payment annuity CDeferred interest annuity DImmediate annuity

D Immediate annuity Correct! An annuity purchased with a single lump-sum payment, with a 25-year fixed-period distribution will be most suitable for this arrangement.

Question 12 of 15 Which of the following is true regarding the spendthrift clause in life insurance policies? AIt allows the beneficiary to select a different settlement option. BIt is only used when the beneficiary is a minor. CIt is the same as irrevocable settlement clause. DIt can protect the policy proceeds from creditors of the beneficiary.

D It can protect the policy proceeds from creditors of the beneficiary. The spendthrift clause in a life insurance policy prevents the beneficiary's reckless spending of benefits, and protects the policy proceeds from creditors of the beneficiary or policyowner.

Question 12 of 15 What is the benefit of choosing extended term as a nonforfeiture option? AIt matures at age 100. BIt allows for coverage to continue beyond maturity date. CIt can be converted to a fixed annuity. DIt has the highest amount of insurance protection.

D It has the highest amount of insurance protection. Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase.

Question 9 of 15 All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT AIt will pay the benefit only for a designated period of time. BThe payments are not guaranteed for life. CThe insurer determines the amount for each payment. DIt is a life contingency option.

D It is a life contingency option. Correct! Under the installments for a fixed period annuity settlement option, the annuitant selects the time period for the benefits; the insurer determines how much each payment will be. This option pays for a specific amount of time only, and there are no life contingencies.

Question 14 of 15 Which of the following is TRUE regarding the accumulation period of an annuity? AIt is also referred to as the annuity period. BIt is a period of time during which the beneficiary receives income CIt is limited to 10 years. DIt is a period during which the payments into the annuity grow tax deferred.

D It is a period during which the payments into the annuity grow tax deferred. The "accumulation period" is the period of time over which the annuitant makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred.

Question 9 of 15 If a retirement plan or annuity is "qualified," this means AIt has a penalty for early withdrawal. BIt accepts after-tax contributions. CIt is noncancellable. DIt is approved by the IRS.

D It is approved by the IRS. Correct! A qualified retirement plan is approved by the IRS, which then gives both the employer and employee benefits such as deductible contributions and tax-deferred growth.

Question 11 of 15 An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium? AIt will remain the same for the new 5-year term. BIt will decrease for the new 5-year term since the insured is now a lesser risk to the company. CIt will increase each year during the next 5 years as the face amount increases each year. DIt will increase because the insured will be 5 years older than when the policy was originally purchased.

D It will increase because the insured will be 5 years older than when the policy was originally purchased. The premium will remain level during the entire level premium term policy period. If the policy renews at the end of the term, the premium will be based on the insured's attained age at the time of renewal.

Question 3 of 15 An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? AVariable Life BAdjustable Life CGraded Premium Life DLimited-pay Life

D Limited-pay Life Correct! In limited-pay policies, the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years.

Question 11 of 15 If an annuitant selects the straight life annuity settlement option, in order to receive all of the money out of the contract, it would be necessary to ADie before his life expectancy. BName a beneficiary. CName another annuitant. DLive at least to his life expectancy.

D Live at least to his life expectancy A straight life annuity pays as long as the annuitant lives. The amount is based on the annuitant's life expectancy.

Question 3 of 15 An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use? AOne-year term BReduction of premium CAccumulation at interest DPaid-up option

D Paid-up option With the paid-up option, the insurer can accumulate dividends at interest and then use them, in addition to interest and the policy's cash value, to pay the policy earlier than planned. This is different from paid-up additions, in which the dividends are used to buy additional policies that increase the face amount of the original policy.

Question 12 of 15 An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe? AAccumulation at Interest BCash option CFlexible Premium DReduction of Premium

D Reduction of Premium The Reduction of Premium option allows the policyholder to apply policy dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year.

Question 11 of 15 Statements made by an applicant for a life insurance policy which are true to the best of one's knowledge are referred to as AFacts. BWarranties. CInformation. DRepresentations.

D Representations. Correct! Representations are statements that the applicant believes to be true, but that are not guaranteed.

Question 13 of 15 A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy ABuilt cash values. BRequired proof of insurability every year. CDecreased death benefit at each renewal. DRequired a premium increase each renewal.

D Required a premium increase each renewal Annually Renewable Term policies' premiums are adjusted each year to the insured's attained age; however, the policy may be guaranteed renewable. Death benefits remain level, and as with any term policy, there are no cash values.

Question 3 of 15 An individual has been contributing to a retirement account after taxes are taken out of his paycheck. His financial advisor told him that he will be allowed to make contributions after age 70½. The account owner does not have to pay taxes on the growth of his account. What type of retirement account is it? A403(b) plan BSimplified Employee Pension Plan CTraditional IRA DRoth IRA

D Roth IRA Correct! Roth IRAs have several distinguishing features. Unlike traditional IRAs, the account owner can continue beyond age 70½, and distributions do not have to begin at age 70½. The contributions are not tax-deductible.

Question 5 of 15 After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called? ATermination penalty BBail-out charge CInflation adjustment DSurrender charge

D Surrender charge If a deferred annuity is surrendered prematurely, a surrender charge is imposed. The charge is generally a percentage that reduces over time until it ends.

Question 1 of 15 If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT ARent. BUtilities. CEmployee payroll. DLoss of the owner's income.

B If a disability income policy contains the own occupation definition, then the insured will be considered disabled if they cannot perform that particular job, regardless of other jobs that they may be able to do.

Question 1 of 15 On a disability income policy that contains the "own occupation" definition of total disability, the insured will be entitled to benefits if they cannot perform AAny job that they are suited for by prior experience. BTheir regular job. CAny job that they are suited for by prior education. DAny job that they are suited for by prior training.

Question 1 of 15 Under a typical health insurance policy, claims that result from injuries while the insured was intoxicated or under the influence of drugs are generally ACovered, but an extra premium is charged when a claim is filed. BCovered with a 90 days' waiting period. CExcluded. DCovered.

Question 1 of 15 When an insurer combines two periods of disability into one, the insured must have suffered a ARecurrent disability. BPartial disability. CResidual disability. DPresumptive disability.

Question 1 of 15 Which New York program specifically provides health insurance for children under the age of 19 whose families meet income guidelines? ATaft-Hartley Trust BHealthy New York CTimothy's Law DChild Health Plus

A Annuities payments Correct! Some parts of an annuities payment are taxable, while others are not. The return of the principal paid in is nontaxable. The portion that is taxable is the actual amount of payment, less the expected return of the principal paid in. This relationship is called the "exclusion ratio".

Question 1 of 15 Which concept is associated with "exclusion ratio"? AAnnuities payments BDividend distribution CHow exclusion riders affect an insurance premium DPolicy provisions

Question 10 of 15 All of the following are true regarding key person disability income insurance EXCEPT AThe employer pays the premiums. BThe employee is the insured. CPremiums are tax deductible as a business expense. DThe employer receives the benefits if the key person is disabled.

Question 10 of 15 All of the following statements about Medicare supplement insurance policies are correct EXCEPT AThey cover the cost of extended nursing home care. BThey cover Medicare deductibles and copayments. CThey supplement Medicare benefits. DThey are issued by private insurers.

BIt allows employers with low claims experience to get lower premiums.

Question 10 of 15 What is the benefit of experience rating? AIt allows employers with high claims experience to obtain insurance. BIt allows employers with low claims experience to get lower premiums. CIt helps employers with high claims experience to get group coverage. DIt helps employees with low claims experience to become exempt from group premiums.

A Golden parachutes

Question 10 of 15 Which of the following coverages is NOT monitored by the Employee Retirement Income Security Act (ERISA)? AGolden parachutes BPension plans CProfit-sharing stock bonus DWelfare benefit plans

D Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.

Question 10 of 15 Which of the following is NOT a feature of a guaranteed renewable provision? AThe insured has a unilateral right to renew the policy for the life of the contract. BCoverage is not renewable beyond the insured's age 65. CThe insured's benefits cannot be reduced. DThe insurer can increase the policy premium on an individual basis.

D Correct! This optional provision specifically excludes coverage for injuries incurred while performing an illegal act. The insurer will not be liable for any loss to which a contributing cause was the insured's commission of or attempt to commit a felony or to which a contributing cause was the insured's being engaged in an illegal occupation.

Question 11 of 15 A man is injured while robbing a convenience store. How does his major medical policy handle the payment of his claim? A50% of claim will be paid. BIf the man is not convicted, he will get 75% of his claim paid. CThe claim is paid in full. DClaim is denied if his policy contains the Illegal Occupation provision.

C Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense. COBRA requires employers with 20 or more employees to continue group medical insurance for terminated workers and dependents for up to 18 months to 36 months. The employee can be required to pay up to 102% of the coverage's premium.

Question 11 of 15 As it pertains to group health insurance, COBRA stipulates that ATerminated employees must be allowed to convert their group coverage to individual policies. BGroup coverage must be extended for terminated employees up to a certain period of time at the employer's expense. CGroup coverage must be extended for terminated employees up to a certain period of time at the former employee's expense. DRetiring employees must be allowed to convert their group coverage to individual policies.

D Correct! Generally life insurance cash values are only income taxed if the policy is surrendered (totally or partially) and the cash value exceeds the premiums paid.

Question 11 of 15 In life insurance policies, cash value increases AAre income taxable immediately. BAre taxed annually. CAre only taxed when the owner reaches age 65. DGrow tax deferred.

Question 11 of 15 Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? AMisrepresentation BAdverse selection CDiscrimination DLaw of large numbers

Question 11 of 15 What is the maximum amount of coinsurance in New York's major medical plans? A25% B35% C40% D50%

B 20 days.

Question 11 of 15 When a health insurance policy is purchased in the state of New York, the insured may return the policy to the insurer and receive a premium refund within the maximum period of A10 days. B20 days. C30 days. D90 days.

C The maximum benefit is based upon monthly income.

Question 11 of 15 Which of the following is NOT a characteristic of a group long-term disability plan? AThe benefit period may be to age 65. BThe benefit can be up to 66 and 2/3% of one's monthly income. CThe benefit can be up to 50% of one's yearly income. DThe elimination period is the same as in the short-term plan's benefit period.

Question 11 of 15 Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen? ABoth plans will continue to pay fully. BThe SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment. CSocial Security will discontinue benefits until the SIS rider expires. DThe SIS rider will discontinue paying benefits.

Question 12 of 15 A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid? AThe insured will have to select a plan from which to collect benefits. BThe benefits will be coordinated. CNeither plan would pay. DEach plan will pay in equal shares.

C The FIO rider allows insureds to increase their benefit levels to certain amounts at specific times without proof of insurability. The following are the typical occasions when an insurer allows for a benefit increase: ages 25, 28, 31, 34, 37 and 40; marriage; and the birth of a child.

Question 12 of 15 According to the Future Increase Option Rider (FIO), which of the following is NOT a qualifying event to increase an insured's benefit level? AMarriage BBirth of a child CDeath of a spouse DAge 40

B Adult dental care.

Question 12 of 15 All of the following are essential benefits required to be included in all health plans purchased in the Marketplace EXCEPT APediatric vision care. BAdult dental care. CHospitalization. DMaternity care.

Question 12 of 15 An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do? ASend the applicant to a doctor for a physical. Nothing can happen until they get the results. BOffer the supplement policy on a guaranteed issue basis CExclude pre-existing conditions from coverage under the supplement policies DLook at the applicant's medical history to decide what premium to charge

A Taxation on accumulation Taxation on accumulation is deferred in both types of plans. The rest of the characteristics would differ.

Question 13 of 15 All of the following would be different between qualified and nonqualified retirement plans EXCEPT ATaxation on accumulation BTaxation of withdrawals CTaxation of contributions DIRS approval requirements

A November 1 through January 31 Correct! Annual open enrollment period is currently scheduled from November 1 through January 31.

Question 13 of 15 When is the annual open enrollment for state insurance exchanges? ANovember 1 through January 31 BDecember 1 through December 31 CJanuary 1 through February 28 DDecember 1 through March 1

C Reducing the premiums paid by employers for group insurance based on loss experience

Question 13 of 15 Which of the following is NOT specifically prohibited by state law as an unfair trade practice? AUsing incomplete comparisons of policies to induce uncalled-for action by the insured BFailing to disclose that the solicitations of an insurance contract are the result of a marketing method CReducing the premiums paid by employers for group insurance based on loss experience DUsing misleading representations to induce uncalled-for action by the insured

B The HMO provides the member with inpatient hospital care, in or out of the service area. The services may be limited for treatment of mental, emotional or nervous disorders, including alcohol or drug rehabilitation or treatment.

Question 13 of 15 Which of the following is true regarding inpatient hospital care for HMO members? AInpatient hospital care is not part of HMO services. BCare can be provided outside of the service area. CCare can only be provided in the service area. DServices for treatment of mental disorders are unlimited.

B Copayment

Question 13 of 15 Which of the following terms describes a specific dollar amount of the cost of care that must be paid by the member? AContractual cost BCopayment CCost share DPrepayment

C Any physician or hospital that qualifies for and agrees to follow the PPO's standards and charges the established fees can be added to the PPO's approved list at any time. The providers may withdraw their name from the list at any time, as well.

Question 14 of 15 How can a new physician be added to the PPO's approved list? APay an annual fee for being on the PPO list. BNew physicians are only added once a year, and are selected by the PPO's Board of Directors. CAgree to follow the PPO standards and charge the appropriate fees. DFill out the appropriate paperwork and wait the 12 month pre-certification period.

Question 14 of 15 In disability income insurance, the own occupation definition of disability applies AFor the first 2 years of a disability. BDuring the waiting period. CDuring the elimination period. DAs long as an individual is unable to work.

CAll providers will have the same coverage options and conditions for each plan.

Question 14 of 15 In reference to the standard Medicare Supplement benefits plans, what does the term standard mean? AAll plans must include basic benefits A-N. BCoverage options and conditions are developed for average individuals. CAll providers will have the same coverage options and conditions for each plan. DCoverage options and conditions comply with the law, but will vary from provider to provider.

B Business overhead insurance is designed to pay the ongoing business expenses of a small business owner while they are disabled and unable to work. It does not pay the salary of the business owner or their loss of profits. However, it will provide the funds needed to pay the salary of employees other than the owners and their other ongoing business expenses, such as rent.

Question 14 of 15 In the event of a loss, business overhead insurance will pay for AMedical bills of the business owner. BRent. CLoss of profits. DSalary of the business owner.

B5%

Question 14 of 15 The inflation protection feature in long-term care policies issued in this state must provide protection for inflation at what percent annually? A2% B5% C6% D8%

C Correct! Dividends are not considered to be income for tax purposes, since they are the return of unused premiums. The interest earned on the dividends, however, is subject to taxation as ordinary income.

Question 14 of 15 Which of the following is true regarding taxation of dividends in participating policies? ADividends are taxable in some life insurance policies and nontaxable in others. BDividends are considered income for tax purposes. CDividends are not taxable. DDividends are taxable only after a certain amount is accumulated annually.

Question 15 of 15 A health insurance plan which involves financing, managing, and delivery of health care services and involves a group of providers who share in the financial risk of the plan or who have an incentive to deliver cost effective service, is called AManaged care plan. BPreferred care plan. CLimited care plan. DSelf-insurer.

C Prepaid plan.

Question 15 of 15 A medical insurance plan in which the health care provider is paid a regular fixed amount for providing care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called AReimbursement plan. BFee-for-service plan. CPrepaid plan. DIndemnity plan.

D Correct! It is required by law that a Limited Policy Notice must be printed on the first page of insurance policies. The statement reads "this is a limited policy," which means that the benefits offered by the policy are limited.

Question 15 of 15 A policyowner is reading a statement on the first page of his health insurance policy, which says "this is a limited policy." What is the name of this statement? APolicy Limitation Notice BStatute of Limitations CLimited Benefit Statement DLimited Policy Notice

A Pay the claim. Correct! Because the accident occurred during the grace period, the insurance company will pay the claim.

Question 15 of 15 An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would APay the claim. BHold the claim as pending until the end of the grace period. CDeny the claim. DPay half of her claim because the insured had an outstanding premium.

Question 15 of 15 An insurer offers a policy very similar to Medicare, although it differs slightly. An agent tells an applicant that the policy is Medicare, since the policies are so similar anyway. Which of the following is true? AThis is illegal only if the policy is bought by the applicant. BThis practice is illegal. CThis is a legal practice. DThis is legal as long as the applicant understands all the benefits.

Question 15 of 15 If an individual's license has been revoked, how soon can he or she obtain a new license? AAfter 60 days of the revocation BNever; once revoked, the license cannot be reinstated CAfter 1 year of the revocation DWithin 12 months, based on the original violation

C Correct! In a direct rollover, the distribution is made directly from the trustee of the first plan to the trustee or administrator/custodian of the new IRA plan.

Question 15 of 15 In a direct rollover, how is the money transferred from one plan to the new one? AFrom the participant to the new plan BFrom the original plan to the original custodian CFrom trustee to trustee DFrom trustee to the participant

Question 2 of 15 A man's physician submits claim information to his insurer before she actually performs a medical procedure on him. She is doing this to see if the procedure is covered under the patient's insurance plan and for how much. This is an example of AConcurrent review. BClaims-delayed treatment. CSuspended treatment. DProspective review.

Question 2 of 15 Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage? ANo, the group must be formed for a purpose other than obtaining group insurance. BNo, a group of individuals cannot apply for group coverage unless represented by an association or trust. CYes, any group can apply for group coverage. DYes, but only if the group is over 35 people.

C When premiums are paid with after tax dollars, the death benefit is generally not subject to federal income taxation.

Question 2 of 15 Death benefits payable to a beneficiary under a life insurance policy are generally AExempt from income taxation if under $7,000. BExempt from income taxation if over $7,000. CNot subject to income taxation by the Federal Government. DSubject to income taxation by the Federal Government.

Question 2 of 15 In respect to the consideration clause, which of the following is consideration on the part of the insurer? AOffering a secondary policy to the applicant BOffering an unconditional contract CExplaining policy revisions to the applicant DPromising to pay in accordance with the contract terms

B Generally not taxed as income.

Question 2 of 15 Life insurance death proceeds are ATaxed as ordinary income. BGenerally not taxed as income. CTaxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income. DTaxed as a capital gain.

Question 2 of 15 Life settlement contracts must be approved by which of the following? AThe state's attorney general BThe Superintendent of Insurance CThe policyowner DThe NAIC

C State law. Correct! State law specifies the minimum number of persons to be covered under a group insurance policy.

Question 2 of 15 The minimum number of persons to be insured under a group health insurance plan is established by AThe NAIC. BFederal law. CState law. DThe employer.

D The Disability Buy-Sell agreement specifies how a business will pass between business owners if one of the owners dies or becomes disabled.

Question 2 of 15 Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled? AProprietary Transfer BAbsolute assignment CTransfer of Ownership DDisability Buy-Sell

D The amount of disability benefits that will be offered to an insured is stated in the policy. It is usually limited to a percentage of the insured's income in order to prevent over-insurance. Review Content

Question 2 of 15 Which of the following factors does an insurer use the most to determine the extent of disability benefits that it will promise in a contract? AThe insured's marital status BThe insured's moral history CThe insured's hobbies DThe insured's income

C A permanent resident lawfully present in the U.S.

Question 2 of 15 Which of the following individuals will be eligible for coverage on the Health Insurance Marketplace? AA U.S. citizen who is incarcerated BA U.S. citizen living abroad CA permanent resident lawfully present in the U.S. DSomeone who has Medicare coverage

C Pre-existing conditions can no longer be excluded from coverage by individual or group medical expense policies. All the other examples are exclusions from coverage.

Question 2 of 15 Which of the following losses will be covered by a group medical expense policy? AAn intentionally self-inflicted injury BAn elective cosmetic surgery CA pre-existing condition DAn injury resulting from active military duty

C Denying a claim after proof of loss statements are completed and submitted by insureds.

Question 2 of 15 Which of the following would NOT be considered an improper claims practice? AMisrepresenting to insureds pertinent facts or policy provisions relating to coverages at issue. BFailing to adopt and implement reasonable standards for prompt investigation and processing of insureds' claims. CDenying a claim after proof of loss statements are completed and submitted by insureds. DFailing to acknowledge and act promptly upon communications with respect to an insurance claim.

D Group plans usually specify the benefits based on a percentage of the worker's income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

Question 2 of 15 Which statement accurately describes group disability income insurance? AIn long-term plans, monthly benefits are limited to 75% of the insured's income. BThere are no participation requirements for employees. CShort-term plans provide benefits for up to 1 year. DThe extent of benefits is determined by the insured's income.

Question 3 of 15 A health insurance policy may cover all of the following risks EXCEPT AWar-related injuries. BDental expenses. CLoss of income due to disability. DMedical expenses.

D 85% MLR requires insurance companies to spend at least 80% (for individual and small group markets) or 85% (for large group markets) of premium dollars on medical care and health care quality improvement, rather than on administrative costs.

Question 3 of 15 According to the Medical Loss Ratio (MLR), what is the minimum percentage of health coverage premium that must be applied to actual medical care in a large group health plan? A50% B75% C80% D85%

B Generally, IRA rollovers must be completed within 60 days from the time the money is taken out of the first plan. If the distribution from the first plan is paid directly to the participant, 20% of the distribution must be withheld by the payor.

Question 3 of 15 An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? A$10,000, 30 days B$8,000, 60 days C$8,000, 30 days D$10,000, 60 days

C Group disability income premium payments are considered tax-deductible by the business as an ordinary business expense. In a plan funded entirely by the employer, income benefits are included in the employee's gross income and taxed as ordinary income.

Question 3 of 15 An insured owns a medical expense policy that he purchased for his family. The insured's employer purchased a Group Disability Income policy for the insured and all eligible employees. The insured subsequently suffered an accident on the job that left him unable to work for four months. If the insured receives benefits from his disability income policy, which of the following would be true? ABenefits from employer contributions are not taxable. BThe insured can deduct his medical expense benefits from his income tax. CBenefits received that are attributable to employer contributions are fully taxable to the employee as income. DPremiums the insured paid for his medical expense policy are normally deductible from his income.

Question 3 of 15 If payment of a premium is required to provide health insurance coverage for a child of the insured, the insured may be required to notify the company of the child's birth and pay the premium within A30 days. B60 days. C90 days. D180 days.

D Incorrect! Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.

Question 3 of 15 In a life settlement contract, who does the life settlement broker represent? AThe insurer BThe beneficiary CThe life settlement intermediary DThe owner

B The own occupation definition of disability usually applies to the first 24 months after a loss.

Question 3 of 15 In disability income insurance, the own occupation definition of disability applies AAs long as an individual is unable to work. BFor the first 2 years of a disability. CDuring the waiting period. DDuring the elimination period.

BEnd-stage renal failure

Question 3 of 15 OBRA requires which disease to be covered by an employer for 30 months before Medicare becomes the primary mode of coverage? AEnd-stage heart failure BEnd-stage renal failure CBlack lung DLeukemia

Question 3 of 15 Which of the following does NOT have to be disclosed in a long-term care (LTC) policy? AAny limitations or conditions of eligibility for LTC benefits BAny riders or endorsements CThe aggregate amount of premiums due DThe meaning of the terms "reasonable" and "customary"

Question 3 of 15 Which of the following individuals must pass the written examination to be licensed as an agent? AA producer previously licensed in New Jersey who is applying for a New York license 120 days after becoming a resident of this state. BA licensee who was licensed on July 1, 1987, to represent any assessment corporation. CA ticket-selling airline representative for one-time issuance of baggage or accident insurance. DAn individual seeking to be a representative of a fraternal benefit society as its agent.

B The insurer may terminate the contract only at renewal for certain conditions The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the right to renew the policy for the life of the contract; however, the guarantee to renew coverage usually only applies until the insured reaches age 65.

Question 3 of 15 Which of the following is NOT a feature of a noncancellable policy? AThe insured has the right to renew the policy for the life of the contract. BThe insurer may terminate the contract only at renewal for certain conditions. CThe premiums cannot be increased beyond the amount stated in the policy. DThe guarantee to renew coverage usually applies until the insured reaches certain age.

Question 3 of 15 Which of the following is NOT covered under Plan A in Medigap insurance? AThe first three pints of blood each year BThe Medicare Part A deductible CApproved hospital costs for 365 additional days after Medicare benefits end DThe 20% Part B coinsurance amounts for Medicare approved services

A A reinstated policy provides immediate coverage for an illness. Accidental injury is covered immediately, but to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date.

Question 4 of 15 All of the following are correct about the required provisions of a health insurance policy EXCEPT AA reinstated policy provides immediate coverage for an illness. BProof-of-loss forms must be sent to the insured within 15 days of notice of claim. CA grace period of 31 days is found in an annual pay policy. DThe entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract.

Question 4 of 15 Under which provision can a physician submit claim information prior to providing treatment? AProspective Review BConcurrent Review CAnticipatory Treatment DSuspended Treatment

DRelief for a major care giver

Question 4 of 15 What type of care is Respite care? ADaily medical care, given by medical personnel BInstitutional care C24-hour care DRelief for a major care giver

Question 4 of 15 Which of the following is true regarding limited health insurance policies? AThey cover every need of a health insurance policy holder. BThey only cover specific accidents or diseases. CThey cover all sickness or accidents that are not specifically excluded. DThey are limited to those enrolled in a group health plan.

C Conformity with State Statutes provision states that any provision of the policy which, on its effective date, is in conflict with the statutes of the state in which the insured resides on that date, is automatically amended to conform to the minimum requirement of the statutes.

Question 4 of 15 Which of the following provisions requires that any policy language that is in conflict with the state statutes of the state in which the insured resides is automatically amended to conform with those of the state of residence? AInsurance with Other Insurers BLegal actions CConformity with State Statutes DIncontestability

Question 5 of 15 An insured has a Social Insurance Supplement rider in her disability income plan. Following a disability, she begins receiving benefit payments from the insurer. She then begins receiving Social Security benefits that are smaller than the SIS benefit payments. At that point, her insurer ends the SIS benefit payments. Which of the following best describes the situation? AMiscommunication. The proper authorities should be notified in order to end Social Security payments so that the SIS rider will continue to pay. BAlthough a mistake may have occurred, the insured has no recourse. CThis is typical of an SIS rider. DThe insured should contact the insurer to confirm her actual Social Security benefit amount. The SIS rider should pay the difference between the rider amount and the actual benefit.

Question 5 of 15 What are the continuing education requirements for licensed insurance agents in the state of New York? A20 hours for life and heath agents and 25 hours for property and casualty brokers every 2 years B15 hours of approved instruction every 2 years C25 hours of instruction annually D30 hours of any insurance-related courses every 4 years

Question 5 of 15 Which of the following statements about occupational vs. nonoccupational coverage is TRUE? AGroup medical expense policies and individual medical expense policies always cover both occupational and nonoccupational injuries. BIndividual disability policies never cover nonoccupational injuries. COnly group disability income policies can be written on an occupational basis. DDisability insurance can be written as occupational or nonoccupational.

BHMOs may pay for services not covered by Medicare.

Question 5 of 15 Which of the following statements is correct? AAll HMOs and PPOs charge premiums beyond what is paid by Medicare. BHMOs may pay for services not covered by Medicare. CHMOs do not pay for services covered by Medicare. DMedicare Advantage is Medicare provided by an approved Health Maintenance Organization only.

D Individual health policies can cover the applicant and the applicant's spouse and children. Underwriting includes all of the people who would be insured under the plan.

Question 5 of 15 Which of the following will NOT be covered under an individual health insurance policy? AThe applicant's adopted child BThe applicant CThe applicant's spouse DThe applicant's house help

B The insurer

Question 5 of 15 Who guarantees a conventional fully-insured group plan? AThe employer BThe insurer CThe insured DThe annuitant

CThe terminally ill.

Question 6 of 15 Hospice care is intended for AHome health visits from a participating home health agency. BThe caregiver. CThe terminally ill. DPeople in need of acute care.

Question 6 of 15 How many pints of blood will be paid for by Medicare Supplement core benefits? AEverything after first 3 B1 pint CFirst 3 DNone; Medicare pays for it all

D Entire contract clause.

Question 6 of 15 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 ATime limit on certain defenses clause. BIncontestability clause. CLegal action against us clause. DEntire contract clause.

D The additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year, the insurer ends the benefit and assumes that Social Security will begin benefit payment.

Question 7 of 15 An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin? A5 B3 C2 D1

CRemain on the group health insurance plan and defer eligibility for Medicare until retirement

Question 7 of 15 When an employee is still employed upon reaching age 65 and eligible for Medicare, which of the following is the employee's option? AEnroll in Medicare when eligible; otherwise, Medicare benefits will be forfeited. BWait until the next birthday to enroll CRemain on the group health insurance plan and defer eligibility for Medicare until retirement DEnroll in Medicare, while the company must provide additional retirement benefits

C Health insurance is a generic term, encompassing several types of insurance contracts, which, though related, are designed to protect against different risks. It provides coverage for expenses related to health care, loss of income, and disability income.

Question 7 of 15 Which of the following is true regarding health insurance? AIt provides death benefit coverage. BIt only covers expenses related to health care. CIt could provide payments for loss of income. DDisability coverage is excluded.

C Life Expectancy is an important concept in life settlement contracts. It refers to a calculation based on the average number of months the insured is projected to live due to medical history and mortality factors (an arithmetic mean).

Question 7 of 15 Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? ARisk exposure BMorbidity CLife expectancy DMortality rate

Question 7 of 15 Who is included in the definition of an agent? AAn agent who devotes only 25% of his time to the solicitation of insurance contracts and does not receive commission BAgents of title insurance companies. CA producer who owns his own field office. DA salaried employee of the insurer who does not solicit insurance or receive a commission

C Payment of premium The two types of consideration on the part of an insurance applicant are payment of premiums and representations on the application.

Question 7 of 15 With respect to the Consideration Clause, which of the following would be considered consideration on the part of the applicant for insurance? AProviding warranties on the application BNotice of policy cancellation CPayment of premium DPromise to renew the policy at the end of the policy period

Question 6 of 15 Under an extended term nonforfeiture option, the policy cash value is converted to AThe same face amount as in the whole life policy. BThe face amount equal to the cash value. CA lower face amount than the whole life policy. DA higher face amount than the whole life policy.

A The same face amount as in the whole life policy Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy..

Question 8 of 15 Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? A Universal life B Variable life C Decreasing term D Straight whole life

A Universal life The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.

Question 9 of 15 A single mother wants to make sure that if she is unable to work for health reasons, she and her child would be protected financially. Which of the following insurance plans would best suit her needs? ATotal disability plan BWorkers compensation CComprehensive health insurance plan DAccidental death & dismemberment

DThere will be a tax.

Question 9 of 15 An HSA holder who is 65 years old decides to use the money in the account for a nonhealth expense. Which of the following is true? AThere will be no taxes and no penalties. BThere will be a tax and a 20% penalty. CThere will be a 20% penalty. DThere will be a tax.

Question 4 of 15 The equity in an equity index annuity is linked to AThe annuitant's individual stock portfolio. BThe insurance company's general account investments. CAn index like Standard & Poor's 500. DThe returns from the insurance company's separate account.

C An index like Standard & Poor's 500.

Question 7 of 15 In a defined contribution plan, AThe contribution and the benefit are unknown. BThe contribution and the benefit are known. CThe contribution is known and the benefit is unknown. DThe benefit is known and the contribution is unknown.

C The contribution is known and the benefit is unknown.

Question 4 of 15 Which of the following is NOT true regarding the annuitant? AThe annuitant's life expectancy is taken into consideration for the annuity. BThe annuitant receives the annuity benefits. CThe annuitant must be a natural person. DThe annuitant cannot be the same person as the annuity owner.

D The annuitant cannot be the same person as the annuity owner. Correct! While they don't have to be, the annuitant and annuity owner are often the same person. The annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written. Since the annuitant's life expectancy is taken into consideration, the annuitant must be a natural person.

A Correct! The insurer would pay 80% of covered expenses after the $500 deductible is satisfied.

Question 1 of 15 An insured has a major medical policy with a $500 deductible and a coinsurance clause of 80/20. If he incurs medical expenses of $4,000, the insurer would pay A$2,800. B$3,200. C$3,500. D$2,500.

Question 1 of 15 In which Medicare supplemental policies are the core benefits found? AAll plans BPlans A and B only CPlan A only DPlans A-D only

BAdult day care

Question 1 of 15 Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis? AHome health care BAdult day care CResidential care DAssisted living

Question 10 of 15 According to the Insurance Frauds Prevention Act, will the person who suspects a fraudulent transaction be penalized for reporting it to the Superintendent? AEach person who reports to the Superintendent will receive a monetary reward. BNo; in no case may the person be penalized. CYes DNo, as long as the act is reported in good faith

A Experience rating

Question 11 of 15 What type of group rating uses the actual experience of the group as a factor in developing the rates to be charged? AExperience rating BDistrict rating CCommunity rating DIndividual rating

B Correct! The federal government established Medicare as a means of providing health coverage for individuals over the age of 65.

Question 12 of 15 At what age does an individual qualify for Medicare? A60 B65 C70 D72

B Correct! Disability benefit payments that are attributed to employee contributions are not taxable, but benefits payments that are attributed to employer contributions are taxable to the employee.

Question 14 of 15 In which of the following health plans are benefit payments attributed to employer contributions taxable to the employee? AMedical Expense BGroup Disability Income CAD&D DDisability Buy Out

B Correct! Business Overhead insurance is often purchased by small employers to pay the ongoing business expenses (such as payroll) in the event the owner of the business becomes disabled. Premiums paid are tax deductible as a business expense, but proceeds paid are taxable as income.

Question 15 of 15 A policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called ARecurrent Disability BBusiness Overhead Expense. CCredit Accident and Health coverage DPartial Disability

Question 2 of 15 In group health policies issued in this state, under normal circumstances, what is the limiting age of dependent children? A19 B21 C26 D30

Question 3 of 15 The primary eligibility requirement for Medicaid benefits is based upon AWhether the claimant is insurable on the private market. BAge. CNumber of dependents. DNeed.

Question 3 of 15 When does a person qualify to receive disability-related income? AWhen the disability reaches a designated state of severity BWhen an injury is severe and the insured is not a dependent CWhen an insured is hospitalized for more than one week DWhen the insured is unable to perform his/her job duties

A It is fully funded by Social Security taxes (FICA).

Question 4 of 15 Concerning Medicare Part B, which statement is INCORRECT? AIt is fully funded by Social Security taxes (FICA). BIt is known as medical insurance. CIt offers limited prescription drug coverage. DIt provides partial coverage for medical expenses not fully covered by Part A.

Question 6 of 15 The Superintendent may refuse to issue a license in all of the following situations EXCEPT if the proposed licensee AIs from another state. BHas not completed the prelicensing education. CIs not trustworthy. DIs not competent.

Question 7 of 15 Who must sign the notice regarding replacement? AApplicant only BAgent only CBoth the applicant and agent DBoth the agent and the insurer

Question 9 of 15 When a group disability insurance policy is paid entirely by the employer, benefits paid to disabled employees are ADeductible income to the employee. BDeductible business expense to the employer. CTaxable income to the employer. DTaxable income to the employee.

C Students at a public school

Question 9 of 15 Which of the following groups would most likely be covered under a blanket accident policy? AFactory workers at the automobile assembly plant BIndependent contractors who work for a general contractor CStudents at a public school DOffice workers for a retail business

B There are two major causes of loss (or perils) covered under a health insurance policy: sickness and accident. Smoking and alcoholism would be considered hazards that may cause a loss.

Question 9 of 15 Which of the following is an example of a peril covered in an accident and health insurance policy? ADeath BSickness CAlcoholism DSmoking

Question 9 of 15 Which of the following refers to "own occupation" disability? AInsured business owner is unable to perform the duties of any related business. BInsured is unable to perform duties of the occupation for which he/she was educated and trained. CInsured is unable to perform duties of any occupation. DInsured business owner is unable to perform the duties of his/her own business.

Question 10 of 15 A Universal Life Insurance policy is best described as a/an AAnnually Renewable Term policy with a cash value account. BVariable Life with a cash value account. CWhole Life policy with two premiums: target and minimum. DFlexible Premium Variable Life policy.

A Annually Renewable Term policy with a cash value account A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

Question 1 of 15 Under a defined benefit retirement plan, who determines what benefits a retired employee will receive? ABeneficiary BFederal government CEmployer DEmployee

C Employer

Question 3 of 15 If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a ADeferred annuity. BPure annuity. CJoint life annuity. DJoint and survivor annuity.

C Joint life annuity.

Question 5 of 15 Which of the following is true about warranties? AThey are true to the best of the agent's knowledge. BThey are true to the best of the applicant's knowledge. CThey are guaranteed to be true. DIf they aren't true, the insurer must file with court to void the policy.

C They are guaranteed to be true. Warranties are statements that are guaranteed to be true. Representations are true to the best of the insurance applicant's knowledge.

Question 10 of 15 What is the waiting period on a Waiver of Premium rider in life insurance policies? A30 days B3 months C5 months D6 months

D 6 months Most insurers impose a 6-month waiting period from the time of disability until the first premium is waived.

B Correct! PPOs contract on a Fee-for-service basis.

Question 10 of 15 Under which of the following organizations are the practicing providers compensated on a fee-for-service basis? AOpen panel BPPO CHMO DBlue Cross/Blue Shield

Question 10 of 15 What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it will be paid? AConcurrent review BComprehensive review CSupplementary chart DProspective review

Question 11 of 15 The form used to establish the terms for both parties when a person sells his life insurance policy to a 3rd unrelated person is called a AUnilateral Contract. BCertificate of Authority. CLiving Benefits Form. DLife Settlement Contract.

B 0%

Question 12 of 15 How much of the premium is paid by employees participating in a non-contributory plan? A75% B0% C25% D50%

B Correct! Dividend interest is taxable; policy loans are not tax deductible, and premiums are not tax deductible.

Question 13 of 15 Which of the following statements is TRUE concerning whole life insurance? APolicy loans are tax deductible. BLump-sum death benefits are not taxable. CDividend interest is not taxable. DPremiums are tax deductible.

Question 2 of 15 An insured has a primary group health plan and an excess plan, each covering losses up to $10,000. The insured suffered a loss of $15,000. Disregarding any copayments or deductibles, how much will the excess plan pay? A$10,000 B$7,500 C$5,000 D$0

D Most companies require that the app be filled out in ink. The agent might make a mistake when filling out the app or the applicant might answer a question incorrectly and want to change it. There are two ways to correct an application. The first and best is to simply start over with a fresh application. If that is not practical, draw a line through the incorrect answer and insert the correct one. The applicant must initial the correct answer.

Question 2 of 15 What is the best way to change an application? AErase the previous answer and replace it with the new answer BWhite-out the previous answer CDraw a line through the incorrect answer and insert the correct one. DStart over with a fresh application

Question 7 of 15 An applicant has a history of heart disease in his family, so he would like to buy a health insurance policy that strictly covers heart disease. What type of policy is this? ATerm health coverage BScheduled benefit coverage CDread disease coverage DSingle indemnity protection

Question 6 of 15 Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? AA policy summary BA notice regarding replacement CA privacy notice DA buyer's guide

A-A policy summary

Question 13 of 15 Upon policy delivery, the producer may be required to obtain any of the following EXCEPT ASigned waiver of premium. BStatement of good health. CPayment of premium. DDelivery receipt.

A-Signed waiver of premium. The policy does not go into effect until the premium has been collected. If the premium was not collected at the time of the application, the producer may also be required to get a Statement of Good Health from the applicant at the time of policy delivery. Waiver of premium is a rider that can be added to a life insurance policy, and not something to be obtained from the applicant.

Question 4 of 15 In insurance policies, contract ambiguities are automatically ruled in the favor of the insured. What privilege does the insurer have in order to balance this? AThe right to determine the wording of a policy BThe right to refute the rulings CThe right to revoke the policy DThe right to raise premiums as a result of court rulings

AThe right to determine the wording of a policy

Question 6 of 15 Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? AStop-loss BConsideration CReasonable expectations DIndemnity

D-Indemnity Correct! The principle of indemnity stipulates that the insured can only collect for the amount of the loss even if the policy is written with greater benefit limits.

Question 1 of 15 What is the purpose of key person insurance? ATo provide health insurance to the families of key employees BTo insure retirement benefits are available to all key employees CTo maintain an account that insures the owner of a company remains solvent DTo lessen the risk of financial loss because of the death of a key employee

DTo lessen the risk of financial loss because of the death of a key employee A business can suffer a financial loss because of the premature death of a key employee that has specialized knowledge, skills or business contacts. A business can lessen the risk of such loss by the use of key person insurance.

Question 9 of 15 Another name for a substandard risk classification is AControlled. BDeclined. CElevated. DRated.

D-Rated.

Question 6 of 15 Upon policy delivery, the producer may be required to obtain any of the following EXCEPT ASigned waiver of premium. BStatement of good health. CPayment of premium. DDelivery receipt.

Question 9 of 15 A producer who fails to segregate premium monies from his own personal funds is guilty of ATheft. BCommingling. CLarceny. DEmbezzlement.

B-Commingling. It is illegal for insurance producers to commingle premiums collected from the applicants with their own personal funds.

Question 3 of 15 Which of the following CANNOT be included along with illustrations used to sell life insurance? AOriginal death benefit BVanishing premium information CName of the insurer DRating information

B-Vanishing premium information Correct! Illustrations used to sell life insurance cannot use the term "vanishing premium" - or any similar term - that implies the policy becomes paid up.

Question 13 of 15 Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? ACoverage is based on the predicted needs of that family. BThe death of an insured must be premature. CIt must be assumed that the death of the insured will occur immediately. DNeed is predicted using the number of years until the insured's retirement.

D-Need is predicted using the number of years until the insured's retirement. In the needs approach method, need is determined by the predicted needs of the family after the premature death of the insured, which must be assumed will happen immediately. The policy allows for benefits to be collected upon the insured's death.

Question 10 of 15 When is the earliest a policy may go into effect? AAfter the underwriter reviews the policy BWhen the application is signed and a check is given to the agent CWhen the first premium is paid and the policy has been delivered DWhen the insurer approves the application

B-When the application is signed and a check is given to the agent The policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.

Question 10 of 15 All advertisements are the responsibility of the ADepartment of Insurance. BInsurer. CInsured. DAdvertising agency.

B-Insurer.

Question 9 of 15 An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? A-Adhesion B-Conditional C-Aleatory D-Good health

C-Aleatory Incorrect! In an aleatory contract, unequal amounts are exchanged between payments and benefits. In this instance, the insured receives a large benefit for a small price.

Question 13 of 15 Which of the following statements concerning buy-sell agreements is true? ABenefits received are considered income taxable. BBuy-sell agreements pay in the event of a medical emergency. CBuy-sell agreements are normally funded with a life insurance policy. DPremiums paid are deductible as a business expense.

C-Buy-sell agreements are normally funded with a life insurance policy. Correct! A buy-sell agreement is simply a contract that establishes what will be done with a business in the event that an owner dies. Buy-sell agreements are normally funded with a life insurance policy.

Question 12 of 15 Which of the following individuals must have insurable interest in the insured? AProducer BPolicyowner CBeneficiary DActuary

B-Policyowner Policyowner must have an insurable interest in the insured, i.e. in his/her own life if the policyowner and the insured is the same person, or in the life of a family member or a business partner.

Question 3 of 15 Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? AInsured's annual expenses. BEffect of inflation on income over time. CPredicted needs of the family after the insured's death. DInsured's current and future income.

C-Predicted needs of the family after the insured's death. Correct! The Human Life Value Approach to determining the value of an individual's life requires the calculation of probable future earnings of the insured, which involves wages, expenses, inflation, amount of time until retirement, and the time value of money. Predicted needs of the family after the insured's death are used in the needs approach.

Question 3 of 15 An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A-Consideration B-Good faith C-Representation D-Adhesion

A-Consideration The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.

Question 4 of 15 All of the following are marketing arrangements used by insurers EXCEPT A-Independent Agency System. B-Reinsurance System. C-General Agency System. D-Direct Response Marketing System.

B . cuz ACD 都对

Question 4 of 15 An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called AGraded premium whole life. BSingle premium whole life. CModified Endowment Contract (MEC). DLevel term life.

B-Single premium whole life. Single premium whole life requires the entire premium to be paid in one lump sum at the policy's inception.

Question 15 of 15 When must insurable interest exist in a life insurance policy? AAt the time of policy delivery BWhen there is a change of the beneficiary CAt the time of loss DAt the time of application

D-At the time of application Correct! In life insurance, insurable interest must exist at the time of application.

Question 14 of 15 All of the following are examples of risk retention EXCEPT A-Copayments. B-Self-insurance. C-Premiums. D-Deductibles.

C-Premiums. Retention is a planned assumption of risk, or acceptance of responsibility for the loss by an insured through the use of deductibles, copayments, or self-insurance.

Question 7 of 15 When the partners of a business develop an arrangement whereby should one of them die or become permanently disabled, the other partners would purchase the interest of the deceased or disabled partner at a predetermined price, this is called a/an AKey person plan. BBusiness overhead expense plan. CExecutive bonus plan. DBusiness continuation plan.

D Business continuation plan. A business continuation plan is an agreement between business owners whereby they agree, should one of them die or become disabled, the surviving owners will purchase the interest of the deceased or disabled owner at a predetermined price. Such a plan is usually funded by each owner purchasing insurance on each of the other owners.

Question 12 of 15 For what reason may a life insurance producer backdate a life insurance policy? ATo make a policy effective during a period when the agent's appointment was in force BTo shorten the period of contestability CTo avoid an increase in premium rate for the insured DTo meet sales quotas established by the insurer

C-To avoid an increase in premium rate for the insured Agents may backdate policies up to 6 months in order to obtain a better premium rate for the insured.

Question 3 of 15 Which of the following would least likely be considered a legitimate need that would be paid by insurance proceeds? ADebt cancellation BDay care CVacation travel expenses DTravel expenses for family to come to the funeral

C-Vacation travel expenses

Question 6 of 15 What is the time period called during which the surviving spouse of the insured does not receive Social Security income benefits? AWaiver of premium BRetention of capital CProbationary period DBlackout period

D-Blackout period Blackout period begins when the youngest child reaches the age of 16, and ends when the surviving spouse qualifies for retirement benefits, as early as age 60. No benefits are paid during this time.

Question 12 of 15 According to OBRA, what is the minimum number of employees required to constitute a large group? A50 B100 C15 D20

Question 13 of 15 The Federal Fair Credit Reporting Act APrevents money laundering. BRegulates consumer reports. CProtects customer privacy. DRegulates telemarketing.

Question 9 of 15 How often must an insurance agent licensed in the state of New York renew the license? AEvery even-numbered year BEvery odd-numbered year CEvery birthday DEvery 2 years

Question 7 of 15 Which of the following is NOT true regarding the accumulation period of an annuity? AIt would not occur in a deferred annuity. BIt is the period during which the annuity payments earn interest. CIt is the period over which the owner makes payments into an annuity. DIt is also known as the pay-in period.

A It would not occur in a deferred annuity. Correct! The "accumulation period" is the period of time over which the annuity owner makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred (which would be the case in a deferred annuity).

D Premiums that were paid by the insured during the elimination period are usually refunded once the insured qualifies to begin receiving benefits.

Question 9 of 15 After the elimination period, a totally disabled insured qualified and started receiving benefits from his disability income policy that has a waiver of premium rider. What will most likely happen to the premiums paid into the policy during the elimination period? APremiums will be retained by the company, but no further premium will be required for the duration of the disability. BPremiums will be prorated. CPremiums will be waived. DPremiums will be refunded.

Question 9 of 15 In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is AMore limited in duration. BBroader in duration. CBroader in general. DMore limited in general.

Question 9 of 15 Regarding cost containment in medical plans, what type of review process do employers and insurers use to evaluate the utilization review process and the effectiveness of the professionals involved in large insurance claims? AConcurrent review BProspective review CPreventive review DRetrospective review

between the insurance company and the employer

for a group policy, the contract is between the insurance company and the employer, union, trust, or other sponsoring organization as opposed to the individual policy where the contract is between the insurance company and the insured. Group Contract.

Question 15 of 15 An individual purchased a life insurance policy on his life naming his wife as primary beneficiary, and their daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? AIf the primary beneficiary predeceases the insured BThe primary and contingent beneficiaries share death benefits equally CWith the primary beneficiary's written consent DIf the insured dies from an accident

A If the primary beneficiary predeceases the insured The contingent beneficiary would need to outlive the insured and primary beneficiary.

Question 14 of 15 Who has the authority to regulate the issuance and sale of variable contracts? AThe State Treasurer BThe issuance and sale of variable contracts is not regulated CThe Superintendent DThe president of the insurance company

C The Superintendent The Superintendent shall have sole authority to regulate the issuance and sale of variable contracts and to issue such reasonable rules and regulations as may be appropriate.

Question 4 of 15 An agent sells insurance over the phone. One of his applicants is heavily drunk when she applies for and then almost instantly receives her policy. Which of the following is true? A-The policy is not legal if it can be proven that the applicant was drunk during the application process. B-The contract is legal, since the agent, acting on behalf of the insurer, granted her the policy. C-The policy is legal; it would only be illegal if the agent had been drunk. D-The policy is legal; only mental retardation and psychiatric illness qualify as limiting factors.

A-The policy is not legal if it can be proven that the applicant was drunk during the application process. When an insurer and insured enter into a contract, both parties must be of legal age and mentally competent. Being heavily drunk impairs mental competency; therefore, if it can be proven that the applicant was drunk during the application and acceptance process, her policy would not be legal.

Question 3 of 15 Which of the following is an example of a producer's fiduciary duty? A-A duty to base all transactions upon the principle of Utmost Good Faith. B-The obligation to tell the truth to the best of one's knowledge C-The trust that a client places in the producer in regard to handling premiums. D-An obligation to state every known fact about the policy the producer is selling.

C-The trust that a client places in the producer in regard to handling premiums. An agent acts in a fiduciary capacity, based upon trust and confidence, when handling the financial affairs of their customers, including the handling of premiums.

Question 6 of 15 Premium payments for personally-owned disability income policies are ANot tax deductible. BEligible for tax credits. CTax deductible. DTax deductible to the extent that they exceed 10% of the adjusted gross income of those itemizing deductions.

Question 5 of 15 Which of the following is an IRS qualified retirement program for the self-employed? A401(k) BKeogh CSplit Dollar DBuy and Sell Agreement

B Keogh

C 7 days.

Question 10 of 15 Under the New York State Disability Benefit Law, for an employed individual, disability benefits will be payable after a waiting period of A60 days. B3 days. C7 days. D31 days.

Question 8 of 15 Prior to purchasing a Medigap policy, a person must be enrolled in which of the following? AAll four parts of Medicare BAny private insurance policy COnly Part A of Medicare DParts A and B of Medicare

Question 9 of 15 What provision in an insurance policy extends coverage beyond the premium due date? AGrace period BFree look CAutomatic premium loan DWaiver of premium

A Grace period Grace period is a mandatory provision found in all life and health insurance policies that provides coverage for a period of time after the premium becomes past due.

D Number of hours worked per week

uestion 8 of 15 A 55-year-old employee has worked part-time for his new employer for 3 months now, but has not been offered health insurance. What factor has limited the employee's eligibility? AThe total amount of time worked for the company BAge CIncome DNumber of hours worked per week

Question 1 of 15 Your client plans to retire at age 50. He would like to purchase an annuity that would provide income from the time he retires to the age when social security and other pension funds become available. What settlement option should he consider? AAnnuity certain BFixed annuity CRefund Life DVariable annuity

A Annuity certain Correct! Annuity Certain option allows the annuitant to select the time period or the amount for the benefits. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.

Question 13 of 15 Which nonforfeiture option has the highest amount of insurance protection? AExtended Term BConversion CDecreasing Term DReduced Paid-up

A Extended Term The Extended Term nonforfeiture option has the same face amount as the original policy, but for a shorter period of time.

Question 6 of 15 Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive? AAmount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit BThere are no deductions taken from death benefits. CPenalty imposed for early withdrawal of the death benefit, plus the amount of earnings lost by the insurance company in interest income D10% federal death benefit income tax, plus the amount of the accelerated benefit

A Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit If an insured withdraws a portion of the death benefit by the use of this rider, the benefit payable at death will be reduced by that amount, plus the amount of earnings lost by the insurance company in interest income.

Question 2 of 15 All other factors being equal, the least expensive first-year premium payment is found in AAnnually Renewable Term. BIncreasing Term. CDecreasing Term. DLevel Term.

A Annually Renewable Term. Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year. Review Content Next Question

Question 6 of 15 Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid AFor 20 years or until death, whichever occurs first. BUntil the policyowner reaches age 65. CFor 20 years. DUntil the policyowner's age 100, when the policy matures.

A For 20 years or until death, whichever occurs first. Correct! Under a 20-pay life policy, all of the premiums necessary to cause the policy to endow at the insured's age 100 are paid during the first 20 years; however, if the insured dies before all of the planned premiums are paid, the beneficiary will receive the face amount as a death benefit.

Question 3 of 15 An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? APay a reduced death benefit BPay the full death benefit CPay nothing; there was a misrepresentation on the application DPay the full death benefit and refund excess premium

A Pay a reduced death benefit Correct! The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. However, it does not apply to statements relating to age, sex and identity.

Question 11 of 15 When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy? AReturn of premium BCost of living CDecreasing term DPremature death

A Return of premium The Return of Premium Rider pays the beneficiary not only the face amount of the policy but also the amount that had been paid in premiums. The rider stipulates that death must occur prior to a certain age in order for the premium amount to be returned. The Return of Premium Rider is funded by using increasing term insurance.

Question 1 of 15 If a life insurance policy has an irrevocable beneficiary designation, AThe beneficiary can only be changed with written permission of the beneficiary. BThe beneficiary cannot be changed for at least 2 years. CThe owner can always change the beneficiary at will. DThe beneficiary cannot be changed.

A The beneficiary can only be changed with written permission of the beneficiary. If a policy has an irrevocable beneficiary designation the beneficiary can only be changed with written permission of the beneficiary.

Question 15 of 15 An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? AThe insured may renew the policy for another 10 years, but at a higher premium rate. BThe insured must provide evidence of insurability to renew the policy. CThe insured may only convert the policy to another term policy. DThe insured may renew the policy for another 10 years at the same premium rate.

A The insured may renew the policy for another 10 years, but at a higher premium rate. Correct! Policies that are guaranteed renewable and convertible may be renewed, without evidence of insurability, for another like term, or may be converted to permanent insurance, without evidence of insurability.

Question 15 of 15 If an insured continually uses the automatic premium loan option to pay the policy premium, AThe policy will terminate when the cash value is reduced to nothing. BThe face amount of the policy will be reduced by the automatic premium loan amount. CThe cash value will continue to increase. DThe insurer will increase the premium amount.

A The policy will terminate when the cash value is reduced to nothing. This option, usually elected at the time of application, provides that in case of a possible policy lapse, the premium will be automatically paid form the contract's guaranteed cash value. However, once the cash value is exhausted, the policy will terminate.

Question 8 of 15 Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? ALiquidation period BDepreciation period CAnnuitization period DPay-out period

B Depreciation period Correct! The "annuitization period" is the time during which accumulated money is converted into an income stream. It is also referred to as the annuity, liquidation or pay-out period.

Question 2 of 15 When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount AThe same as the original policy minus the cash value. BEqual to the original policy for as long a period of time that the cash values will purchase. CIn lesser amounts for the remaining policy term of age 100. DEqual to the cash value surrendered from the policy.

B Equal to the original policy for as long a period of time that the cash values will purchase. Correct! With this option, the cash value is used as a single premium to purchase the SAME face amount as the original policy for as long a period of time as the cash will buy at the insured's current age.

Question 8 of 15 What is the advantage of having a qualified annuity? AHigher dividends BFavorable tax treatment CNo filing with the IRS DReceiving a lump-sum settlement tax free

B Favorable tax treatment Correct! Those annuities meeting the IRS guidelines receive favorable tax treatment for funding qualified retirement plans.

Question 1 of 15 A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the APrimary beneficiary. BIrrevocable beneficiary. CRevocable beneficiary. DSecondary beneficiary.

B Irrevocable beneficiary. The policyowner may change a revocable designation at any time and without the consent of the beneficiary. Irrevocable beneficiaries, on the other hand, have a vested interest in the policy, so the policyowner may not be able to exercise certain rights without their consent.

Question 15 of 15 Why is an equity indexed annuity considered to be a fixed annuity? AIt is not tied to an index like the S&P 500. BIt has a guaranteed minimum interest rate. CIt has modest investment potential. DIt has a fixed rate of return.

B It has a guaranteed minimum interest rate. Correct! While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate.

Question 10 of 15 A prospective deferred annuity owner is concerned about what would happen if he surrendered the annuity before the annuitization period. The agent most likely explained which of the following? AIt is not possible to surrender an annuity before the annuitization period. BNonforfeiture option guarantees that the owner will receive a surrender value of the contract. CThe owner will receive some of the money back, which will depend on the surrender value established by the insurer at the time that the contract is terminated. DThe insurance company will apply the money to another annuity or a life insurance policy, but the money cannot be returned.

B Nonforfeiture option guarantees that the owner will receive a surrender value of the contract.

Question 6 of 15 Which of the following can surrender a deferred annuity contract? AA deferred annuity cannot be surrendered. BOnly the annuity owner COnly the insurance company for nonpayment of premiums DThe beneficiary after the owner's death

B Only the annuity owner Correct! If the need arises, a deferred annuity contract may be surrendered only by the annuity owner. At surrender the owner receives the value of the annuity minus a surrender charge.

Question 9 of 15 Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? AOption A BOption B CCorridor option DVariable option

B Option B Correct! Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.

Question 13 of 15 Which of the following is another term for the accumulation period of an annuity? AAnnuity period BPay-in period CPremium period DLiquidation period

B Pay-in period The accumulation period is also known as the pay-in period. It is the period of time over which the annuitant makes payments (premiums) into an annuity.

Question 4 of 15 An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? AHR 10 plan BProfit sharing plan C401(k) plan DTax-sheltered account plan

B Profit sharing plan A profit sharing plan is one where the employer will contribute monies into an employee's retirement plan when the company shows a profit. The others are all qualified plans, but company profit isn't an issue with them.

Question 15 of 15 Which nonforfeiture option provides coverage for the longest period of time? AAccumulated at interest BReduced paid-up (longest) CExtended term ( highest) DPaid-up option

B Reduced paid-up The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.

Question 4 of 15 An insured committed suicide one year after his life insurance policy was issued. The insurer will APay nothing. BRefund the premiums paid. CPay the policy's cash value. DPay the full death benefit to the beneficiary.

B Refund the premiums paid. If the insured commits suicide within 2 years following the policy effective date, the insurer's liability is limited to a refund of premium.

Question 11 of 15 Which two terms are associated directly with the way an annuity is funded? ARenewable or convertible BSingle payment or periodic payments CIncreasing or decreasing DImmediate or deferred

B Single payment or periodic payments Annuities are characterized by how they can be paid for: either a single payment (lump sum) or through periodic payments in which the premiums are paid in installments over a period of time. Periodic payment annuities can be either level, in which the annuitant/owner pays a fixed installment, or the payments can be flexible, in which the amount and frequency of each installment varies.

Question 1 of 15 Which of the following is TRUE regarding variable annuities? AA person selling variable annuities is required to have only a life agent's license. BThe annuitant assumes the risks on investment. CThe funds are invested in the company's general account. DThe company guarantees a minimum interest rate.

B The annuitant assumes the risks on investment. The payments that the annuitant invests into the variable annuity are invested in the insurer's separate account. The separate account under many annuities provides the annuitant with a dozen or more investment options ranging from "money market funds" to "growth stock funds" to "precious metal funds". Therefore, the annuitant assumes the risk of the investment.

Question 2 of 15 A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? AIncontestability period BAssignment CAutomatic premium loan DWaiver of premium

C Automatic premium loan This provision is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.

Question 4 of 15 Which of the following best describes fixed-period settlement option? AThe death benefit must be paid out in a lump sum within a certain time period. BIncome is guaranteed for the life of the beneficiary. CBoth the principal and interest will be liquidated over a selected period of time. DOnly the principal amount will be paid out within a specified period of time.

C Both the principal and interest will be liquidated over a selected period of time. Under the fixed-period option (also called period certain), a specified period of years is selected, and equal installments are paid to the recipient. Both the principal and interest are liquidated together over the selected period of time.

Question 2 of 15 A tax-sheltered annuity is a special tax-favored retirement plan available to ACertain age groups only. BCertain groups depending on factors such as race, gender, and age. CCertain groups of employees only. DAnyone.

C Certain groups of employees only. Correct! A tax-sheltered annuity is a special tax-favored retirement plan available only to certain groups of employees (nonprofit charitable, educational, religious, and other 501c(3) organizations, including all employees in public education).

Languages: English Español Chapter: Qualified Plans Question 2 of 15 All of the following apply to defined benefit plans EXCEPT AThe employer is responsible for providing promised retirement benefits. BThey are qualified plans and cannot discriminate. CContributions are tied to the company profits. DBenefits are based on a specified formula that incorporates years of service, salary and age of retirement.

C Contributions are tied to the company profits. Defined benefit plans are not tied to the employing company's profit; however, the employer is obligated to provide a certain, specified retirement benefit to an employee. The benefit is based upon a percent of salary multiplied by the number of years of service.

Question 15 of 15 What happens when a policy is surrendered for its cash value? AThe policy can be reinstated by paying back all policy loans and premiums. BThe policy can be converted to term coverage. CCoverage ends and the policy cannot be reinstated. DCoverage ends but the policy can be reinstated at any time.

C Coverage ends and the policy cannot be reinstated. Correct! Once the cash surrender value option is selected, the coverage is terminated and the policy cannot be reinstated. cash surrender value : 保险退保解约金值

Question 10 of 15 The term "fixed" in a fixed annuity refers to all of the following EXCEPT AEqual annuity payments BAmount and length of payments CDeath benefit DGuaranteed rate of interest

C Death benefit A fixed annuity is fixed in the sense that it provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next. The company also guarantees the specified dollar amount for each payment and the length of the payout period. Annuities do not provide a death benefit.

Question 6 of 15 What are the two components of a universal policy? AMortality cost and interest BSeparate account and policy loans CInsurance and cash account DInsurance and investments

C Insurance and cash account A universal policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annual renewable term insurance. The cash account accumulates on a tax deferred basis each year and earns either the guaranteed contract rate or the current rate, whichever is higher. Review Content Next Question

Question 9 of 15 Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? AInvestment performance of the insured BStatewide predetermined annual interest rate CInsurer's guaranteed minimum rate of interest DInvestment performance of the company

C Insurer's guaranteed minimum rate of interest Correct! With fixed annuities, the company is required to pay at least a guaranteed minimum rate of interest to the owners. If the company investments perform well, the company will pay a higher interest rate, but since the interest rate can never fall below the guaranteed minimum, that's what ultimately determines what the company will pay.

Question 7 of 15 During partial withdrawal from a universal life policy, which portion will be taxed? APrincipal BLoan CInterest DCash value

C Interest During the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation.

Question 1 of 15 Which of the following is TRUE regarding the accumulation period of an annuity? AIt is a period of time during which the beneficiary receives income BIt is limited to 10 years. CIt is a period during which the payments into the annuity grow tax deferred. DIt is also referred to as the annuity period.

C It is a period during which the payments into the annuity grow tax deferred. The "accumulation period" is the period of time over which the annuitant makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred.

Question 15 of 15 Which of the following best describes annually renewable term insurance? ANeither the premium nor the death benefit is affected by the insured's age. BIt provides an annually increasing death benefit. CIt is level term insurance. DIt requires proof of insurability at each renewal.

C It is level term insurance. Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

Question 14 of 15 Which of the following is true of a children's rider added to an insured's permanent life insurance policy? AThe policy covers only the natural children of the insured. BEach child covered must show evidence of insurability. CIt is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age. DIt is permanent insurance.

C It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age. Correct! Children's rider are term insurance covering all of the children in the family, including newly born children, and are convertible to permanent insurance upon a child reaching the maximum age without evidence of insurability.

Question 9 of 15 Which of the following is TRUE regarding the annuity period? AIt is also referred to as the accumulation period. BIt is the period of time during which the annuitant makes premium payments into the annuity. CIt may last for the lifetime of the annuitant. DDuring this period of time the annuity payments grow interest tax deferred.

C It may last for the lifetime of the annuitant. The "annuity period" is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.

Question 8 of 15 Which of the following is an example of a limited-pay life policy? ALevel Term Life BStraight Life CLife Paid-up at Age 65 DRenewable Term to Age 70

C Life Paid-up at Age 65 Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity.

Question 15 of 15 Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? A Life annuity with period certain B Increasing term C Limited pay whole life D Interest-sensitive whole life

C Limited pay whole life Correct! Premium payments will cease at her age 65, but coverage will continue to her death or age 100.

Question 11 of 15 An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this? AIncontestable clause BGrace period CReinstatement provision DWaiver of premium provision

C Reinstatement provision A lapsed policy may be reinstated within 3 years by paying back premiums, with interest, and proving insurability.

Question 5 of 15 When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments? AAccelerated benefit provision BLoan provision CSpendthrift provision DSettlement option

C Spendthrift provision When a life insurance policy contains a spendthrift provision, all rights of the beneficiary to change time of payment or amount of installments, surrender for cash, borrow against, or assign for any purpose, are withdrawn and those parts of the policy that may give the beneficiary such rights are declared inoperative and void.

Question 1 of 15 Which of the following policies would be classified as a traditional level premium contract? AUniversal Life BVariable Universal Life CStraight Life DAdjustable Life

C Straight Life Correct! Straight whole life policies have a level guaranteed face amount and a level premium for the life of the insured.

Question 13 of 15 The interest earned on policy dividends is ATax deductible. B40% taxable, similar to a capital gain. CTaxable. DNontaxable.

C Taxable. Dividends are a return of unused premiums on which the insured has already paid taxes. Any interest earned is taxable as ordinary income.

Question 2 of 15 Children's riders attached to whole life policies are usually issued as what type of insurance? AAdjustable life BWhole life CTerm DVariable life

C Term Correct! Children's term riders provide term insurance with coverage expiring when the minor reaches a certain age.

Question 12 of 15 All of the following employees may use a 403(b) plan for their retirement EXCEPT AA part-time classroom aide. BThe vice president of a charitable organization. CThe CEO of a private corporation. DA school bus driver.

C The CEO of a private corporation. Not all public employees are eligible for 403(b) plans, or tax-sheltered annuities, only employees of public education (local, state, or federal), as well as employees of charitable organizations.

Question 2 of 15 The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? AA corporation can be an annuitant as long as the beneficiary is a natural person. BThe contract can be issued without an annuitant. CThe annuitant must be a natural person. DA corporation can be an annuitant as long as it is also the owner.

C The annuitant must be a natural person.

Question 15 of 15 The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE? AThe insurance company will retain the cash value and pay back the premiums to the owner's estate. BThe money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary. CThe beneficiary will receive the greater of the money paid into the annuity or the cash value. DBecause the annuitization period has not started, the owner's estate will receive the money paid into the annuity.

C The beneficiary will receive the greater of the money paid into the annuity or the cash value. If the annuitant dies during the accumulation period, the beneficiary receives benefits from the annuity: either the amount paid into the plan or the cash value, whichever is greater.

Question 12 of 15 When a fixed annuity owner pays pays a monthly annuity premium to the insurance company, where is this money placed? AEach contract's separate account BThe annuity owner's account CThe insurance company's general account DForwarded to an investor

C The insurance company's general account Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. The insurance company can afford to make guarantees because the money of a fixed annuity is placed in the general account of the insurance company, which is part of its investment portfolio. The company makes conservative enough investments to insure a guaranteed rate to the annuity owners.

Question 14 of 15 All of the following statements are true regarding installments for a fixed amount EXCEPT AThis option pays a specific amount until the funds are exhausted. BThe annuitant may select how big the payments will be. CThe payments will stop when the annuitant dies. DValue of the account and future earnings will determine the time period for the benefits.

C The payments will stop when the annuitant dies. Installments for a fixed amount option has no life contingencies. A specific amount of benefits will be paid until funds are exhausted whether or not the annuitant is living.

Question 7 of 15 The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as AThe policyowner cannot skip premiums without the policy lapsing. BThe next month's premium is sufficient to cover both the current premium amount and the skipped amount. CThe policy contains sufficient cash value to cover the cost of insurance. DThe previous premium payments were high enough to create an excess of premium.

C The policy contains sufficient cash value to cover the cost of insurance. Correct! In Universal Life Insurance, the policyowner may skip a premium payment without lapsing the policy as long as the policy contains sufficient cash value at the time to cover the cost of insurance for that premium period.

Question 7 of 15 If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined? AThe surrender charge is a flat fee determined by the annuity owner when the annuity is purchased. BThe surrender charge will increase as the accumulation period increases. CThe surrender charge is a percentage of the cash value and decreases over time. DThe surrender charge is always 7% of the cash value.

C The surrender charge is a percentage of the cash value and decreases over time. If a deferred annuity is surrendered prematurely, a surrender charge is imposed. The charge is generally a percentage that reduces over time until it ends.

Question 10 of 15 Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? AVariable life BAdjustable life CUniversal life DFlexible life

C Universal life Correct! The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.

Question 14 of 15 An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? ATerm life BLimited pay CUniversal life DAdjustable life

C Universal life Correct! Universal Life policies allow for policyholders to withdraw a limited portion of the policy's cash value. Each withdrawal, however, is usually charged, and the amount and frequency of withdrawals are usually limited.

Question 2 of 15 Which of the following may contribute to proof of death for the purposes of insurance benefits payment? AA notarized letter from the doctor who pronounced the insured dead BA copy of the insured's will CAn obituary DA death certificate

D A death certificate Proof of death usually consists of a copy of a death certificate and a form provided by the insurance company.

Question 6 of 15 When an annuity is written, whose life expectancy is taken into account? ABeneficiary BLife expectancy is not a factor when writing an annuity. COwner DAnnuitant

D Annuitant The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be.

Question 5 of 15 In an annuity, the accumulated money is converted into a stream of income during which time period? APayment period BAmortization period CConversion period DAnnuitization period

D Annuitization period

Question 8 of 15 In reference to fixed annuities, what comprises most of a life insurance company's general account? AAggressive stocks and bonds BCompany stock CS&P 500 index DConservative investments like bonds

D Conservative investments like bonds Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. The insurance company can afford to make guarantees because the money of a fixed annuity is placed in the general account of the insurance company, which makes conservative enough investments (like bonds) to ensure a guaranteed rate to the annuity owners.

Question 2 of 15 If an annuitant dies before annuitization occurs, what will the beneficiary receive? AEither the amount paid into the plan or the cash value of the plan, whichever is the lesser amount BAmount paid into the plan CCash value of the plan DEither the amount paid into the plan or the cash value of the plan, whichever is the greater amount

D Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

Question 8 of 15 Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose ASection 457 Deferred Compensation Plan. B403(b) plan. C401(k) plan. DHR-10 (Keogh Plan).

D HR-10 (Keogh Plan).

Question 11 of 15 A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it? AFlexible BDeferred CVariable DImmediate

D Immediate Correct! With an immediate annuity, distribution starts within 1 year of purchase.

Question 13 of 15 Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain? AIndependent Group Contract BSingle CNonqualified DIndividual

D Individual Correct! There are two main types of annuities arrangements: group and individual. Group contracts can be obtained through an employer. If that option is not available, individuals could obtain an individual annuity, which, as the name implies, is available for purchase and ownership solely by individuals.

Question 10 of 15 A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy? AJoint and survivor BLife with period certain CJoint limited annuity DJoint life

D Joint life Joint life annuity settlement option pays benefits to two or more annuitants, but stops upon the death of the first.

Question 8 of 15 Which of the following best describes the difference between Pure Life and Life with Guaranteed Minimum settlement options? AIn Life with Guaranteed Minimum, payments can be made in installments. BPure Life guarantees to pay out all the proceeds. CPure Life is not a life contingency option. DLife with Guaranteed Minimum will pay the remaining principal to the beneficiary.

D Life with Guaranteed Minimum will pay the remaining principal to the beneficiary. With the Life with Guaranteed Minimum, if the annuitant dies before the principal amount (the amount he paid for the annuity) has been paid out, the remainder of the principal amount will be refunded to his/her beneficiary. Under the Pure Life option, the payments cease upon the annuitant's death regardless of the amount of the principal paid out.

Question 5 of 15 Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? AJumping Juvenile BJuvenile Premium Provision CWaiver of Premium DPayor Benefit

D Payor Benefit If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

Question 10 of 15 If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights? AThe insured and the policyowner BBeneficiary CInsured DPolicyowner

D Policyowner Only the policyowner has the ownership rights under the policy, and not the insured or the beneficiary.

Question 12 of 15 To sell variable life insurance policies, an agent must receive all of the following EXCEPT AFINRA registration. BA securities license. CA life insurance license. DSEC registration.

D SEC registration. Agents selling variable life products must be registered with FINRA, have a securities license, and must be licensed within the state to sell life insurance. SEC registration is for securities, not agents.

Question 4 of 15 Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT? ASEPs allow the employer to make annual tax deductible contributions up to 25% of an employee's earned income. BSEPs have a higher tax deductible contribution limit than an IRA. CEmployer contributions are not included in the employee's gross income. DSEPs are suitable for large companies.

D SEPs are suitable for large companies. An SEP is a benefit plan that is designed to be provided by a small employer for the benefit of the employees.

Question 15 of 15 Equity indexed annuities AAre more risky than variable annuities. BAre security instruments. CInvest conservatively. DSeek higher returns.

D Seek higher returns Equity Indexed Annuities are not securities, but they invest on a relatively aggressive basis to aim for higher returns. Like a fixed annuity the Equity Indexed Annuity has a guaranteed minimum interest rate. The current interest rate that is actually credited is often tied to a familiar index like the Standard and Poor's 500.

Question 1 of 15 Which of the following statements about a suicide clause in a life insurance policy is TRUE? ASuicide is covered for a specific period of years and excluded thereafter. BSuicide is covered as long as the policy is in force. CSuicide is excluded as long as the policy is in force. DSuicide is excluded for a specific period of years and covered thereafter.

D Suicide is excluded for a specific period of years and covered thereafter. In most states, if death results from suicide within a certain period, the insurer is not obligated to pay the death benefit.

Question 4 of 15 In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to AThe insured's spouse. BThe policyowner. CThe insurance company. DThe contingent beneficiary.

D The contingent beneficiary. Correct! A contingent beneficiary receives the death benefit if the primary beneficiary predeceases the insured. If there are no designated beneficiaries surviving the insured, the benefits are paid to the estate of the insured.

Question 1 of 15 Which of the following best describes what the annuity period is? AThe period of time from the accumulation period to the annuitization period BThe period of time during which money is accumulated in an annuity CThe period of time from the effective date of the contract to the date of its termination DThe period of time during which accumulated money is converted into income payments

D The period of time during which accumulated money is converted into income payments

Question 3 of 15 All of the following are general requirements of a qualified plan EXCEPT AThe plan must be communicated to all employees. BThe plan must be for the exclusive benefits of the employees and their beneficiaries. CThe plan must be permanent, written and legally binding. DThe plan must provide an offset for social security benefits.

D The plan must provide an offset for social security benefits. Plans must meet the general requirements established by IRS.

Question 14 of 15 Which of the following statements is TRUE concerning irrevocable beneficiaries? AThey may be changed at any time. BThey can never be changed. CThey may be changed only on the anniversary date of the policy. DThey can be changed only with the written consent of that beneficiary.

D They can be changed only with the written consent of that beneficiary.

Question 14 of 15 An absolute assignment is a ATransfer of some ownership rights in a policy. BChange of beneficiary. CChange of insurer. DTransfer of all ownership rights in a policy.

D Transfer of all ownership rights in a policy. Absolute Assignment involves transferring all rights of ownership to another person or entity. This is a permanent and total transfer of all the policy rights. The new policyowner does not need to have an insurable interest in the insured.

Question 8 of 15 The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called AGuaranteed insurability. BWaiver of cost of insurance. CPayor benefit. DWaiver of premium.

D Waiver of premium. Waiver of premium rider waives the premium if the insured owner has been totally disabled for a predetermined period. The payor benefit provides for an owner other than the insured and the waiver of cost of insurance is found in Universal Life.

Question 1 of 15 When would a 20-pay whole life policy endow? AAt the insured's age 65 BAfter 20 payments CIn 20 years DWhen the insured reaches age 100

D When the insured reaches age 100 A limited-pay whole life policy, just like straight life, endows for the face amount if the insured lives to age 100. The premium is, however, completely paid off in 20 years.

B If an owner dies or becomes disabled, the disability policy under the buy-sell agreement would provide enough cash to accomplish a buyout of the company.

Question 1 of 15 A small business owner is the insured under a disability policy that funds a buy-sell agreement. If the owner dies or becomes disabled, the policy would provide which of the following? ADisability insurance for the owner BCash to the owner's business partner to accomplish a buyout CThe rent money for the building DThe business manager's salary

Question 1 of 15 An insured has been injured in an accident. Although he is still receiving benefits from his disability income policy, he does not have to pay premiums. This means that the policy includes AReturn of premium rider. BBenefit of payment clause. CWaiver of all payment. DWaiver of premium feature.

C Benefits received that are attributable to employer contributions are fully taxable to the employee as income. Group disability income premium payments are considered tax-deductible by the business as an ordinary business expense. In a plan funded entirely by the employer, income benefits are included in the employee's gross income and taxed as ordinary income.

Question 1 of 15 An insured owns a medical expense policy that he purchased for his family. The insured's employer purchased a Group Disability Income policy for the insured and all eligible employees. The insured subsequently suffered an accident on the job that left him unable to work for four months. If the insured receives benefits from his disability income policy, which of the following would be true? ABenefits from employer contributions are not taxable. BThe insured can deduct his medical expense benefits from his income tax. CBenefits received that are attributable to employer contributions are fully taxable to the employee as income. DPremiums the insured paid for his medical expense policy are normally deductible from his income.

DSmall employer Small employer means any person, firm, corporation, partnership or association that employs up to 100 eligible employees.

Question 1 of 15 If a firm has 50 employees at the point it applies for health coverage, what is its classification? APartnership BParticipating plan CLarge group DSmall employer

B An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure.

Question 1 of 15 In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost ACounts toward coinsurance. BIs not covered. CMust be covered by the insurer. DCounts toward deductible.

C The insuring clause, usually on the first page of the policy, is the general statement that defines the insurance agreement and identifies the insured and the insurance company and states what kind of loss (peril) is covered.

Question 1 of 15 The insuring clause of a disability policy usually states all of the following EXCEPT AThat insurance against loss is provided. BThe types of losses covered. CThe method of premium payment. DThe identities of the insurance company and the insured.

D Taxes are deferred. The interest accumulated in an annuity is the tax base, but the taxes are deferred during the accumulation period. The cost base is the premium dollars that have already been taxed and will not be taxed again when withdrawn from the contract.

Question 1 of 15 Which of the following best describes taxation during the accumulation period of an annuity? AThe annuity is subject to state taxes only. BThe annuity is subject to both state and federal taxation. CThe growth is subject to immediate taxation. DTaxes are deferred.

C Cost-saving services, also known as case management provisions, include the following: controlled access of providers, large claim management, preventive care, hospitalization alternatives, second surgical opinions, preadmission testing, catastrophic case management, risk sharing, and providing high quality of care.

Question 1 of 15 Which of the following is NOT a cost-saving service in a medical plan? ASecond surgical opinions BRisk sharing CDenial of coverage DPreventive care

Question 1 of 15 Which of the following is NOT among the goals of a Medicare supplement application? ADetermining whether or not the policy will replace another accident and health policy BAdvising applicants regarding the availability of counseling services CPresuming the applicant is eligible for Medicaid, based on the nature of the policy DDetermining whether or not an applicant has an existing Medicare supplement policy

A Correct! The term Business of Life Settlement refers to any activity relating to the solicitation and sale of an insurance policy to a third party who has no insurable interest in the insured (i.e. soliciting, negotiating, effectuating, monitoring or tracking life settlement contracts).

Question 1 of 15 Which of the following is NOT considered Business of Life Settlement? AA producer discusses the advantages of a universal life policy and how the flexible premium allows the owner to control the cash value and death benefit income. BA producer mails life settlement advertising to a client outside of the state. CA producer tracks the progress of a life settlement contract he has submitted to a life settlement provider. DA producer discusses the advantages and disadvantages of a life settlement contract for a client.

C Correct! Section 1035 of the Internal Revenue Code does not give a specific time limit to complete such an exchange.

Question 1 of 15 Which of the following is NOT true of Section 1035 Policy Exchanges? AIt is an IRS Code which permits like kind exchanges of property. BIt is typically used when exchanging or replacing a less competitive life policy with a more competitive life policy. CAny exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days. DIt requires an absolute assignment of the existing policy to the replacing company who surrenders the contract and issues a replacement policy.

C By conditions of employment

Question 1 of 15 Which of the following options best depicts how the eligibility of members for group health insurance is determined? ABy the physical conditions of the applicants at the time of employment BIn such a manner as to establish individual selection as to the amounts of insurance CBy conditions of employment DEligibility is not determined, but simply accepted

A The employer is the policyholder.

Question 1 of 15 Which of the following statements concerning group health insurance is CORRECT? AThe employer is the policyholder. BOnly the employer receives a certificate of insurance. CEach employee receives a policy. DUnder group insurance, the insurer may reject certain individuals from coverage.

D Correct! Defamation is making statements that are false as to the financial condition of any insurer and which are calculated to injure any person engaged in the business of insurance.

Question 1 of 15 Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? AUndercutting BTwisting CSlandering DDefamation

C The return of unused premiums is called a dividend. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums.

Question 1 of 15 Which of the following terms is used to name the nontaxed return of unused premiums? AInterest BSurrender CDividend DPremium return

B Correct! Group plans usually specify the benefits based on a percentage of the worker's income. Group long-term plans provide monthly benefits usually limited to 60% of the individual's income.

Question 1 of 15 Which statement accurately describes group disability income insurance? AShort-term plans provide benefits for up to 1 year. BThe extent of benefits is determined by the insured's income. CIn long-term plans, monthly benefits are limited to 75% of the insured's income. DThere are no participation requirements for employees.

B Correct! Distributions from 401(k) plans are taxable as ordinary income in the year of the distribution. However, if the distribution is rolled over to a Traditional IRA, taxes are deferred until the required minimum IRA distributions begin (which is generally no later than age 70 1/2). Since this client actually took a distribution (instead of making a trustee-to-trustee roll over), the distribution is subject to 20% withholding tax.

Question 10 of 15 A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? AThe amount distributed is subject to ordinary income tax. BThe amount of the distribution is reduced by the amount of a 20% withholding tax. CNo taxes are due since the plan participant is over age 59 1/2. DThere is a 10% early withdrawal penalty.

C Platinum Bronze level benefit plans pay 60% of expected health care costs; silver level plans pay 70%; gold level plans pay 80%, and platinum level plans pay 90%.

Question 10 of 15 According to the PPACA metal levels classification, if a health plan is expected to cover 90% of the cost for an average population, and the participants would cover the remaining 10%, what type of plan is that? ASilver BGold CPlatinum DBronze

Question 10 of 15 Death benefits payable to a beneficiary under a life insurance policy are generally ASubject to income taxation by the Federal Government. BExempt from income taxation if under $7,000. CExempt from income taxation if over $7,000. DNot subject to income taxation by the Federal Government.

Question 10 of 15 In order to be a licensed life settlement broker, a person must complete which of the following requirements? APost a surety bond BSubmit to a drug test CSubmit fingerprints DHave been a licensed life producer for at least 6 months

D Correct! In a PPO, the insured does not have to select a primary care physician. Conversely, In a PPO, all network providers are considered "preferred," and you can visit any of them, even specialists, without first seeing a primary care physician. Certain services may require Plan precertification, an evaluation of the medical necessity of inpatient admissions and the number of days required to treat your condition.

Question 10 of 15 Regarding a PPO, which of the following is correct when selecting a primary care physician? AThe insured may choose medical providers not found on the preferred list and still retain coverage. BThe insured is allowed to receive care from any provider, but if the insured selects a PPO provider, the insured will realize lower out-of-pocket costs. CIf a non-network provider is used, the insured's out-of-pocket costs will be higher. DAll of the above are correct

C In group disability income policies, benefit payments that are attributed to employee contributions are not taxable, but benefits payments that are attributed to employer contributions are taxable to the employee. Review Content Next Question

Question 10 of 15 Under which of the following disability income plans would the benefits be subject to income tax? AKey person BPartnership buy-out CGroup DIndividual

A They are available for an additional premium.

Question 10 of 15 Which of the following is true regarding optional benefits with long-term care policies? AThey are available for an additional premium. BOnly standard benefits are available with LTC policies. CThey are offered at no additional cost to the insured. DThey are included in all policies.

Question 10 of 15 Which of the following options best depicts how the eligibility of members for group health insurance is determined? ABy the physical conditions of the applicants at the time of employment BIn such a manner as to establish individual selection as to the amounts of insurance CBy conditions of employment DEligibility is not determined, but simply accepted

C Under an Own Occupation plan, if the insured cannot perform duties of his/her current job or the job that he/she was educated and trained for, disability benefits will be paid, even if the insured would be capable of earning income at a different occupation.

Question 10 of 15 Which of the following refers to "own occupation" disability? AInsured business owner is unable to perform the duties of his/her own business. BInsured business owner is unable to perform the duties of any related business. CInsured is unable to perform duties of the occupation for which he/she was educated and trained. DInsured is unable to perform duties of any occupation.

C Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.

Question 12 of 15 An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits? APartial benefits BFull benefits until the blindness lifts CNo benefits DFull benefits

C An insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder. Optional policy provisions can be changed by an insurer, as long as the changes do not adversely affect the policyholder.

Question 10 of 15 Which of the following statements is true concerning the alteration of optional policy provisions? AAn insurer may change the wording of optional policy provisions that would adversely affect the policyholder but must first receive state permission before the change goes into effect. BOnce any kind of provision is written, it cannot be changed. CAn insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder. DAn insurer may change the wording of optional provisions, regardless of its effect on the policyholder.

D Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.

Question 10 of 15 Which of the following statements regarding Business Overhead Expense policies is NOT true? APremiums paid for BOE are tax-deductible. BAny benefits received are taxable to the business. CLeased equipment expenses are covered by the plan. DBenefits are usually limited to six months.

B The grace period is 7 days on a policy with a weekly premium mode; 10 days if a monthly premium mode; 31 days on other premium modes.

Question 10 of 15 Which of the following will vary the length of the grace period in health insurance policies? AThe term of the policy BThe mode of the premium payment CThe length of any elimination period DThe length of time the insured has been insured

D Accidental bodily injury is an unforeseen and unintended injury that resulted from an accident rather than a sickness.

Question 11 of 15 A person steps off a street car and trips and breaks his ankle. This type of injury can be described as AA recurrent injury. BIntentional. CNot covered. DSudden and unforeseen.

D Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of at least two limbs (Loss of use does not qualify in some policies.), total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work.

Question 11 of 15 An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? APartial benefits BFull benefits for 2 years CNo benefits DFull benefits

D A residual disability will pay an amount to make up the difference between what the insured would have earned before the loss.

Question 11 of 15 Disability income policies can provide coverage for a loss of income when returning to work after recovering from total disability. What is the name of this policy? ARecurrent disability BPartial disability CIncome replacement DResidual disability

A For disability income benefits to be paid, the insured must whatever definition of total disability is stated in the policy, which varies. The "any occupation" definition states that an insured is disabled if they cannot perform any job that they are suited for by prior education, training or experience. The "own occupation" definition states that an insured is disabled if they cannot perform their own job, whatever that may be.

Question 11 of 15 In disability income insurance, if an insured is considered disabled if they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability? AAny occupation BTypical CStatutory DOwn occupation

AThe insurer will return a percentage of the premiums paid.

Question 11 of 15 Regarding the return of premium option for LTC policies, what happens to the premium if the policy lapses? AThe insurer will return a percentage of the premiums paid. BThe insurer will not return any premiums in the case the policy is allowed to lapse. CThe premium will only be returned if the insured dies. DThe insurer will return all of the premiums paid.

Question 11 of 15 To be eligible for tax credits under the ACA, individuals must have income that is what percent of the Federal Poverty Level? ABetween 10% and 100% BBetween 100% and 400% CHigher than 300% DLess than 10%

B Presumptive disability is a provision that is found in most disability income policies that specifies conditions that will automatically qualify the insured for full disability benefits, such as the loss of two limbs.

Question 11 of 15 Which of the following is considered a presumptive disability under a disability income policy? ALoss of one hand or one foot BLoss of two limbs CLoss of one eye DLoss of hearing in one ear

Question 12 of 15 An insurance agent was born in 1983. He obtained his New York insurance license in 2014. When will the agent's license expire? AJanuary 1st every even-numbered year BEvery year on the license issue date CEvery 2 years on the license issue date DOn the agent's birthday every odd-numbered year

A The insurer is cancelling the insured's policy on illegal grounds. An insurer can cancel a policy within 90 days of the effective coverage date, but it cannot cancel coverage based on a claim that was made prior to cancellation. Therefore, it is illegal for the insurer to cancel the policy in this context.

Question 12 of 15 An insured has a heart attack 40 days after his new health insurance policy goes into effect. He has a quadruple bypass surgery and a long hospital stay. As a result, the insurer cancels the policy with a written notice 80 days after the effective policy date. Which of the following is true? AThe insurer is cancelling the insured's policy on illegal grounds. BThe insurer must pay a small benefit amount. CThe insured must now pay all of the costs related to his heart attack and find a new insurer. DThe insurer waited too long to cancel the coverage.

B Correct! Once the primary insurer has paid the full available benefit, the secondary insurer will cover what the first company will not pay, such as deductibles and coinsurance. The insured will, then, be reimbursed for out-of-pocket costs.

Question 12 of 15 An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer? A$0 B$500 C$1,000 D$2,000

C If deductibles increase, premiums decrease in response. In other words, if the insured assumes more risk by paying a higher deductible, the insurer will lower premium amounts in response.

Question 12 of 15 As deductible amounts increase, premium amounts change in what way? ARemain the same. Changes in premium amounts do not affect deductible amounts. BEither increase or decrease. CDecrease DIncrease

A Correct! Hospital indemnity/hospital confinement indemnity policy provides payment based only on the number of days confined in a hospital.

Question 12 of 15 Hospital indemnity/hospital confinement indemnity policy will provide payment based on AThe number of days confined in a hospital. BThe type of illness. CThe premiums paid into the policy. DThe medical expense incurred.

B Conversion

Question 12 of 15 If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 60 days? ARenewability BConversion CReinstatement DGrace period

A Occasional nursing or rehabilitative care

Question 12 of 15 In long-term care insurance, what type of care is provided with intermediate care? AOccasional nursing or rehabilitative care BNonmedical daily care CDaily care, but not nursing care DIntensive care

D One of the most important issues in calculating the amount to be paid under a life settlement is life expectancy of the owner of the policy. The insurance company will have to pay premiums for the duration of the contract, thus adding to the cost of the purchase.

Question 12 of 15 Life expectancy is used in the calculation of which of the following? ACash values BExtended term CDividends DLife settlements

CPrescription drug benefit.

Question 12 of 15 Medicare Part D provides AMedical insurance. BPrivate fee-for-service plans. CPrescription drug benefit. DHospital insurance.

C Correct! The elimination period is a waiting period, expressed in days, not dollars, imposed on the insured from the onset of disability until benefit payments commence.

Question 12 of 15 The period of time immediately following a disability during which benefits are not payable is AThe grace period. BThe residual period. CThe elimination period. DThe probationary period.

A An undetermined percentage for each dollar contributed by the employee. Under the bonus or thrift plan, the employer will contribute certain amount or percentage for each dollar contributed by the employee. There is no specific rule as to how much the employer must contribute.

Question 12 of 15 Under the 401(k) bonus or thrift plan, the employer will contribute AAn undetermined percentage for each dollar contributed by the employee. BAll of the money to the plan. C30% of what the employee contributes. D75% of what the employee contributes.

D If the beneficiary chooses to leave the money in the tax-deferred account until the calendar year in which the owner would have attained age 70½, the distributions would be subject to income taxation at the rate at the time of withdrawal.

Question 12 of 15 What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary? AIncome tax on distributions plus 10% penalty. BCapital gains tax on distributions and no penalty. CCapital gains tax on distributions plus 10% penalty. DIncome tax on distributions and no penalty.

D Provisions may be reworded by the insurer. The Uniform Individual Accident and Sickness Policy Provisions Law defines the rights and duties of both the insurer and the policyholder. Although the wording of the provisions may change from insurer to insurer, the provisions are essentially the same and are required by law to be included in all health insurance policies. The wording of the provisions may be altered, provided that the changes would not be detrimental to the policyholder or beneficiary.

Question 12 of 15 Which is true regarding the Uniform Individual Accident and Sickness Policy Provisions Law? AThe purpose of the provision is to define the right of the policyholder; there is a separate law outlining the rights of insurers. BThere are ten mandatory provisions. CThere are twelve optional policy provisions. DProvisions may be reworded by the insurer.

B The insurance company cannot cancel a noncancellable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the right to renew the policy for the life of the contract; however, the guarantee to renew coverage usually only applies until the insured reaches age 65.

Question 12 of 15 Which of the following is NOT a feature of a noncancellable policy? AThe insured has the right to renew the policy for the life of the contract. BThe insurer may terminate the contract only at renewal for certain conditions. CThe premiums cannot be increased beyond the amount stated in the policy. DThe guarantee to renew coverage usually applies until the insured reaches certain age.

Question 13 of 15 All of the following are true about group disability Income insurance EXCEPT ABenefits are usually short term. BThe waiting period starts at the onset of the injury or sickness. CThe longer the waiting period, the lower the premium. DCoverage applies both on and off the job.

D A proportionate amount In the event that an insured is covered on an expense-incurred basis for the same expenses under multiple insurers and the insurers are not informed about the other sources of coverage before the loss, proportionate shares of the claims should be paid.

Question 13 of 15 An insured carries health insurance with two different providers and is covered on an expense incurred basis. He has an appendectomy and files the claims to both insurers. Neither company is notified in advance that the insurer has other coverage. What should each insurer pay? AOnly one should pay the full amount. BNothing. The insured lied about the dual nature of his coverage, so the insurers are not responsible for covering the claims. CThe full amount DA proportionate amount

C If a premium is past due and the insurer owes claim payment, the amount of the premium will be deducted from the amount of the claim. For example, if a claim is worth $500 and the premium costs $200, the insured would receive the net total of $300 from his insurer.

Question 13 of 15 An insured owes his insurer a premium payment. Since then, he incurs medical expenses. The insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. What provision allows for this? AProof of loss BPayment of claims CUnpaid premium DLegal action

Question 5 of 15 A candidate for a life and health agent license would need to complete how many hours of prelicensing education? A20 B40 C50 D90

C Under an Own Occupation plan, if the insured cannot perform his/her current job for a period of up to two years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that two-year period. After that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid.

Question 13 of 15 An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan? AShe would not receive any benefits. B3 years C2 years D1 month

ALimit enrollment to a specific number. Insurers cannot limit enrollment by number. However, they can limit enrollment to specific time periods, require people to work a certain number of hours to be classified as employees, and can limit changes to policies to be made only at established intervals.

Question 13 of 15 Regarding health insurance coverage for small groups, insurers are permitted to do any of the following EXCEPT ALimit enrollment to a specific number. BOnly allow changes in coverage to be made once a year or at any established interval. CRequire employees work a certain number of hours per week to be covered. DAllow enrollment only in certain time periods.

A The Superintendent is appointed by the Governor and remains in office as for the duration of the Governor's term in office.

Question 13 of 15 The Superintendent is AAppointed by the Governor. BElected by popular vote. CAppointed by the state senate. DHired by the insurance department.

C The following taxation rules apply to contributions made to traditional IRA plans: tax-deductible contributions for the year of the contribution (based on the person's income); contributions must be made in "cash" in order to be tax deductible; excess contributions are taxed at 6% per year as long as the excess amounts remain in the IRA; and tax-deferred earnings are not taxed until withdrawn.

Question 13 of 15 Traditional IRA contributions are ANever tax deductible. BPartially tax deductible depending on the income level. CTax deductible. DDeducted based on the income level.

C As long as the funds are transferred intact and the form is filed, taxation is deferred.

Question 13 of 15 What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences? A401(k) Plan BSection 457 Deferred Compensation Plan CSection 1035 Policy Exchange DModified Endowment Exchange

Question 13 of 15 Which of the following applies to partial disability benefits? APayment is based on termination of employment. BBenefits are reduced once an insured is no longer under a doctor's care. CPayment is limited to a certain period of time. DAn insured is entitled to a principal sum benefit for the partial loss of a limb.

C Tax deductible.

Question 13 of 15 Your client wants to know what the tax implications are for contributions to a Health Savings Account. You should advise her that the contributions are APost-tax dollars. BSubject to capital gains taxes. CTax deductible. DSubject to personal income taxes.

C The cost of living adjustment (COLA) rider will help protect against inflation. Under this rider the insured's monthly benefit will be increased automatically, once the claim has begun. Generally the first increase would be at the end of one year to be followed by annual increases for as long as the insured remains on the claim.

Question 14 of 15 After a year of receiving disability income benefits, the insured notices that her monthly benefit has increased slightly. What rider does the policy most likely have that would cause this? ASocial Security Rider BAdditional Monthly Benefit Rider CCost of Living Adjustment Rider (COLA) DAnnual Renewable Term Rider

Question 14 of 15 Life insurance death proceeds are ATaxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income. BTaxed as a capital gain. CTaxed as ordinary income. DGenerally not taxed as income.

A Entire contract. The policy, together with the attached application, constitutes the entire contract. This provision limits the use of evidence other than the contract and the attached application in a test of the contract's validity. This is a mandatory provision in life insurance.

Question 14 of 15 The provision that states that both the printed contract and a copy of the application form the contract between the policyowner and the insurer is called the AEntire contract. BCertificate of insurance. CAleatory contract. DMaster policy.

A The Free-Look Period occurs after a policy is delivered. This period allows the insured to review the policy and return it for a refund of the premium within a certain time interval.

Question 14 of 15 What phase begins after a new policy is delivered? AFree-look period BInsurability period CElimination period DGrace period

B Open panel Correct! When a medical care giver contracts with a health organization to provide services to its members or subscribers, but retains the right to treat patients who are not members or subscribers, it is referred to as open panel.

Question 14 of 15 What term is used to describe when a medical caregiver contracts with a health organization to provide services to its members or subscribers, but retains the right to treat patients who are not members or subscribers? AIndemnity contract BOpen panel CClosed panel DRestrictive rights

A Disability benefit payments that are attributed to employee contributions are not taxable, but benefits payments that are attributed to employer contributions are taxable.

Question 14 of 15 When a group disability insurance policy is paid entirely by the employer, benefits paid to disabled employees are ATaxable income to the employee. BDeductible income to the employee. CDeductible business expense to the employer. DTaxable income to the employer.

D The term "owner" refers to the owner of the policy who may seek to enter into a life settlement contract. This does not include an insurance provider, a qualified institutional buyer, a financing entity, a special purpose entity, or a related provider trust.

Question 14 of 15 Which of the following best defines the owner of a life settlement contract? AA person insured under the contract BA fiduciary for the contract CAn insurance provider DA person who is selling the contract

Question 14 of 15 Which of the following is NOT a qualification for licensing as an insurance producer in this state? AComplete the required minimum hours of prelicensing training BBe at least 18 years of age CBe a state resident at the date of application DHave a letter of recommendation attesting to the applicant's trustworthiness

Question 14 of 15 Which of the following is NOT true regarding a disclosure statement for Medicare supplement policies? AIt must be provided to the applicant within 30 days of the application. BIt must include premium information. CIt must be issued in at least 12-point type. DIt must outline all the benefit plans used in the policy.

B Correct! Professional Employer Organizations (PEOs) handle employee management tasks, including employee benefits and payroll and workers compensation. Because they combine the employees of several companies under one umbrella, they can negotiate better rates on health care and workers compensation coverage.

Question 14 of 15 Which of the following is an entity that can be hired by an employer to handle all its employee management tasks? ACreditor group BProfessional Employer Organization CMultiple-Employer Trust DMultiple Employer Welfare Association

CMedicaid

Question 14 of 15 Which of the following programs expands individual public assistance programs for people with insufficient income and resources? ASocial Security BUnemployment compensation CMedicaid DMedicare

B Correct! A public adjuster is any person, firm, association or corporation, who for a commission, acts on behalf of the insured in negotiating a settlement of a claim for loss or damage to property.

Question 14 of 15 Who represents the insured in the investigating of a claim? AAgent BPublic adjuster CBroker DIndependent adjuster

D The policy that covers the person filing the claim will be considered the primary policy.

Question 15 of 15 A man works for Company A and his wife works for Company B. The spouses are covered by health plans through their respective companies that also cover the other spouse. If the husband files a claim, AThe insurance through his wife's company is primary. BThe insurance plans will split the coverage evenly. CBoth plans will pay the full amount of the claim. DThe insurance through his company is primary.

A No benefits Correct! The Narcotics & Intoxicants Provision stipulates that the insurer will not cover any injury or illness resulting from intoxication created by drugs or alcohol. Treatment for substance abuse is typically still covered under most policies. This provision is geared specifically toward injuries and illnesses resulting from substance abuse.

Question 15 of 15 An insured is involved in a car accident. After the accident is determined to be her fault, the police give her a breathalyzer test to determine whether or not she had been drinking alcohol before the accident. Her blood alcohol level is over the legal limit. What type of health benefits will her health insurance policy pay for her injuries if the policy includes the narcotics and intoxicants provision? ANo benefits BOnly post-hospitalization benefits CFull benefits DPartial benefits

B Most group disability income is nonoccupational coverage, covering insureds only off the job. The employer carries workers compensation for on the job injuries or sickness.

Question 15 of 15 The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called AWorkers compensation. BNonoccupational coverage. CUnemployment coverage. DOccupational coverage.

C In many cases, the initial premium is not paid until the policy is delivered. Most insurance companies require that when the agent collects the premium, he or she must also obtain a statement signed by the insured testifying to the continued good health.

Question 15 of 15 When the policy premium wasn't submitted with the application, what should the agent obtain from the insured upon policy delivery? AA conditional contract BA unilateral contract CA statement of good health DA medical report

D With Life Settlements, unlike with viatical settlements, the seller does not need to be terminally ill. They usually involve life insurance policies with a face amount of $250,000 or more, "key-person" coverage, corporate owned policies, or policies representing excess coverage that is no longer needed, and could be sold for an amount greater than the current cash value.

Question 15 of 15 Which of the following is NOT true of life settlements? AThey could be used for a key person coverage. BThey could be sold for an amount greater than the current cash value. CThey involve insurance policies with large face amounts. DThe seller must be terminally ill.

B Jeremy had to have both legs amputated, but has learned how to take care of himself and to get around in a wheelchair

Question 2 of 15 All of the following would be qualified as a dependent under a Dependent Care Flexible Spending Account, EXCEPT APete is severely autistic and refuses to take care of his own personal needs, which are taken care of by his father BJeremy had to have both legs amputated, but has learned how to take care of himself and to get around in a wheelchair CJoe was paralyzed from the neck down in a car accident and is cared for by his wife DMatt must be constantly watched due to his violent muscle spasms which often lead to Matt injuring himself

A Correct! The elimination period is the time immediately following the start of a disability when benefits are not payable. This is used to reduce the cost of providing coverage and eliminates the filing of many claims.

Question 2 of 15 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 would indicate that his policy was probably written with a 30-day AElimination period. BBlack-out period. CProbationary period. DDisability period.

B To service the existing business

Question 2 of 15 For which of the following reasons can a temporary license be issued? ATo provide temporary help to a licensed producer BTo service the existing business CTo solicit new business DTo negotiate new insurance contracts

C 90 days Correct! Once a policy is in effect, an insurer has 90 days to cancel a policy by written notice.

Question 2 of 15 How long after the date of issue may an insurer cancel an accident and health policy? A30 days B60 days C90 days DOnce a policy is issued, it cannot be cancelled unless the insurer finds a fraudulent misrepresentation in the application.

D A whole life insurance policy is exchanged for a term insurance policy. The key is that the exchange may not be from a less tax-advantaged contract to a more tax-advantaged contract. "Same to same" is acceptable.

Question 2 of 15 Which of the following is NOT an allowable 1035 exchange? AA whole life insurance policy is exchanged for a Universal life insurance policy. BAn annuity is exchanged for another annuity. CA life insurance policy is exchanged for an annuity. DA whole life insurance policy is exchanged for a term insurance policy.

A Correct! In the event that an insured is covered on an expense-incurred basis for the same expenses under multiple insurers and the insurers are not informed about the other sources of coverage before the loss, proportionate shares of the claims should be paid.

Question 3 of 15 An insured has medical insurance coverage through 2 different providers, both covering the same expenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled? AEach insurer should pay a proportionate share of the claim. BOne of the insurers will pay fully, while the other will not pay any benefits. COnce the insurers discover the duplicate coverage, the policies would most likely be cancelled, and no claim paid. DThe insured should receive full benefits from each insurer.

Question 3 of 15 In this state a temporary license may be issued for all of the following reasons EXCEPT AAn agent's retirement. BThe death of an agent. CAn agent's disability. DAn agent's time in the military service

C All of these eligibility requirements are correct, except an individual who was previously covered for at least 6 months. HIPAA requires that the individual have a previous continuous creditable health coverage for at least 18 months.

Question 3 of 15 Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? AAn individual who doesn't qualify for Medicare may be eligible. BThe gap of coverage for eligibility is a period of 63 or less days. CAn individual who was previously covered by group health insurance for 6 months is eligible. DAn individual who has used up COBRA continuation coverage is eligible.

A To provide continuation of coverage for terminated employees Correct! The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires any employer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event.

Question 3 of 15 What is the purpose of COBRA? ATo provide continuation of coverage for terminated employees BTo provide coverage for the dependents CTo provide health coverage for people with low income DTo protect the insureds against insolvent insurers

Question 4 of 15 All of the following may be excluded from coverage in a Major Medical Expense policy, EXCEPT AEmergency surgery. BCustodial care. CCosmetic surgery. DCoverage provided under workers compensation.

D Medical reimbursement benefits help to pay medical costs for accidental injuries that are not considered to be disabling.

Question 4 of 15 An insured severely burns her hand, but is not classified as disabled. Which of the following types of coverage would cover at least a portion of the insured's medical expenses? AMedical expense compensation BAccidental death & dismemberment CPartial disability DMedical reimbursement benefit

Question 4 of 15 In disability income insurance, the own occupation definition of disability applies AAs long as an individual is unable to work. BFor the first 2 years of a disability. CDuring the waiting period. DDuring the elimination period.

D Correct! The stop-loss amount is the maximum amount that the insured pays out of pocket during the year. When the insured's out-of-pocket expenses reach the stop-loss, the insurance company then provides coverage at 100% of eligible expenses for the remainder of the year.

Question 4 of 15 In major medical insurance policies, when the insured's share of coinsurance reaches a certain amount, the insured is no longer obligated to pay it. This feature is known as AMaximum benefits. BDeductible. CCoordination of benefits. DStop-loss.

Question 4 of 15 In order for a nonresident licensee to become a resident producer in New York, the licensee must APass a written exam. BApply within 90 days of becoming a resident. CWait 6 months and close out all existing business. DFulfill New York's prelicensing requirements.

D The death benefit is not income taxable; any interest earned is income taxable.

Question 4 of 15 When the owner of a $250,000 life insurance policy died, the beneficiary decided to leave the proceeds of the policy with the insurance company and selected the Interest Settlement Option. If at the time of withdrawal the interest paid was $11,000, the beneficiary would be required to pay income tax on ANone, because the beneficiary has not received the death benefit. B$261,000. C$239,000. D$11,000.

C FMLA

Question 4 of 15 Which of the following acts provides an employee with 12 workweeks of leave to care for a son or daughter born to that employee? ACOBRA BERISA CFMLA DADA

Question 4 of 15 Which of the following persons is required to hold a producer license? AA person who takes messages related to claims BA person who administers employee benefits CA person who negotiates insurance contracts DA person who creates insurance advertisements

B Individuals who are not covered by an employer-sponsored plan may deduct the amount of their IRA contributions regardless of their income level.

Question 4 of 15 Who can make a fully deductible contribution to a traditional IRA? AA person whose contributions are funded by a return on investment BAn individual not covered by an employer-sponsored plan who has earned income CAnybody: all IRA contributions are fully deductible regardless of income level DSomeone making contributions to an educational IRA

AThe lending institution

Question 4 of 15 Who is the beneficiary in a credit health policy? AThe lending institution BThe insurer CThe estate of the borrower DThe Federal Government

C If an owner dies or becomes disabled, the disability policy under the buy-sell agreement would provide enough cash to accomplish a buyout of the company.

Question 5 of 15 A small business owner is the insured under a disability policy that funds a buy-sell agreement. If the owner dies or becomes disabled, the policy would provide which of the following? AThe business manager's salary BDisability insurance for the owner CCash to the owner's business partner to accomplish a buyout DThe rent money for the building

A Correct! Stranger-originated life insurance (STOLI) policies are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.

Question 5 of 15 An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of AA STOLI policy. BA prearranged funeral plan. CA viatical settlement. DThird-party ownership.

B Correct! If the owner dies before distributions have begun, the entire interest must be distributed in full on or before December 31 of the calendar year that contains the fifth anniversary of the owner's death, unless the owner named a beneficiary.

Question 5 of 15 When must an IRA be completely distributed when a beneficiary is not named? ADue date of the deceased owner's final tax return including extensions. BDecember 31 of the year that contains the fifth anniversary of the owner's death. CDue date of beneficiary's tax return including extensions. DDecember 31 of the year following the year of the owner's death.

D The HMO subscriber must choose a primary care physician (PCP) who acts as a gatekeeper. If the member needs the attention of a specialist, the PCP must make a referral. This helps the member avoid higher priced specialists unless it is truly necessary.

Question 5 of 15 Which of the following is another name for a primary care physician in an HMO? ASubscriber BReferring physician CSpecialist DGatekeeper

B Home health care

Question 5 of 15 Which of the following types of LTC is NOT provided in an institutional setting? AIntermediate care BHome health care CCustodial care DSkilled nursing care

D Master policy Correct! In group insurance the policy is called the master policy and is issued to the policyowner, which could be the employer, an association, a union, or a trust.

Question 6 of 15 In group insurance, what is the policy called? AEntire contract BCertificate of authority CCertificate of insurance DMaster policy

Question 6 of 15 Insurance that would pay for hiring a replacement for an important employee who becomes disabled is called AKey employee disability insurance. BBlanket disability insurance. CLong-term disability. DBusiness overhead expense disability insurance.

B Gets higher. Correct! LTC policies also define the benefit period for how long coverage applies, after the elimination period. The benefit period is usually 2 to 5 years, with a few policies offering lifetime coverage. Obviously the longer the benefit period, the higher the premium will be; and the shorter the elimination period, the higher the premium will be.

Question 6 of 15 Regarding long-term care coverage, as the elimination period gets shorter, the premium AGets lower. BGets higher. CRemains constant. DPremiums are not based on elimination periods.

CNotice Regarding Replacement.

Question 6 of 15 Shortly after a replacement transaction on a Medicare supplement policy, the insured decided to cancel the policy, but is unsure whether the free-look provision applies. The insured could find that information in the ABuyer's Guide. BCertificate of Coverage. CNotice Regarding Replacement. DPolicy application.

A Correct! The free-look provision allows a policyowner to review a new health policy after it has been delivered. If the policyowner decides to return it within a certain time period, the full premium will be refunded. In New York, a free-look period cannot be longer than 20 days.

Question 6 of 15 Twenty-five days after a health insurance policy is delivered, the policyowner decides that she would like to return the policy and receive a refund of premium. Which of the following is true? AThe policyowner will not receive a refund because the free-look period is over. BThe policyowner will not receive a refund because once a policy is purchased, the premiums cannot be refunded. CThe insurer will provide a full refund. DThe insurer will provide a prorated refund.

D 100%

Question 6 of 15 Under the Affordable Care Act, what percentage of preventive care must be covered without cost sharing? A25% B50% C80% D100%

A Correct! Routine and major restorative care covers the costs of dental work, such as oral surgery, bridges, dentures, and cavity treatment. Routine and preventative maintenance covers routine dental check-ups only.

Question 6 of 15 Which of the following dental insurance categories would cover the filling of cavities? ARoutine and major restorative care BOrthodontic care CThis type of work is not covered. DRoutine and preventative maintenance

Question 6 of 15 Which of the following is correct about a group health insurance policy issued in New York? AIt cannot exclude newborn children from coverage. BIt cannot exclude coverage for VA hospital treatment. CIt cannot provide coverage for handicapped children. DIt cannot exclude coverage from an occupational accident.

Question 7 of 15 A 37-year-old owns a policy with a Guaranteed Insurability Rider. The policyowner would like to increase the benefit amount offered by the policy. What documentation will be required? ANo documentation BProof of insurability CMedical records DAttending physician's report

A Correct! If an applicant is aged 65 or greater and applies for Medicare supplement coverage while covered under Part B Medicare insurance, an insurer cannot alter the price of coverage based on prior claims experience or health status, provided that the application was made during the first 6 months of Part B coverage. The insurer may, however, exclude benefits during the first 6 months based upon a pre-existing condition for which the policyholder received treatment during the 6 months before it became effective.

Question 7 of 15 A 70-year-old individual who bought a Part B Medicare policy 2 months ago just began kidney dialysis treatments this week. The individual is now applying for a Medicare supplement policy, which would begin in 8 months. Which of the following could the insurer do to avoid paying for the dialysis? ADeclare a pre-existing condition BPermanently exclude coverage for dialysis CDeny the supplement policy DCharge a higher premium

A Immediately Correct! Coverage for accidents is immediate when reinstatement occurs, but coverage for sickness may have a waiting period of about 10 days.

Question 7 of 15 A Health insurance policy lapses but is reinstated within an acceptable timeframe. How soon from the reinstatement date will coverage for accidents become effective? AImmediately BAfter 14 days CAfter 21 days DAfter 31 days

D Correct! Insureds are persons covered by health insurance and who receive benefits. Subscribers are people in whose name the contract is issued.

Question 7 of 15 A man bought an individual health insurance policy for himself. Which of the following roles does he now legally have? ABroker BSubscriber only CInsured only DBoth subscriber and insured

D Under the concurrent review process, the insurance company will monitor the insured's hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned.

Question 7 of 15 An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure that everything proceeds according to the insurer's schedule. This is called AProspective review. BComprehensive review. CSchedule monitoring. DConcurrent review.

C The insured is in an accident and incurs a large claim. The company may not cancel coverage due to covered claims. All the rest are allowable reasons for an insurer to terminate the contract.

Question 7 of 15 An insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy? AThe insured reaches the maximum age limit specified in the policy. BWithin two years of the application, the insurer discovers a misrepresentation. CThe insured is in an accident and incurs a large claim. DThe insured does not pay the premium.

Question 8 of 15 A health insurance plan that covers all accidents and sicknesses that are not specifically excluded from the policy is referred to as a ABroad plan. BComprehensive plan. CGeneral plan. DService plan.

D In accordance with Section 1035 of the Internal Revenue Code, certain exchanges of life insurance policies and annuities may occur as nontaxable exchanges. ROLLOVER: traditional IRA or a Roth IRA. 1035 EXCHANGE: Life policy cash value to annuity.

Question 8 of 15 A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called AQualified distribution. BPremature distribution. CRollover. D1035 exchange.

D60%

Question 8 of 15 According to the PPACA rules, what percentage of health care costs will be covered under a bronze plan? A10% B30% C40% D60%

Question 8 of 15 An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true? AThe group plan will pay. BThe group plan will pay a portion of the employee's expenses. CThe group plan will pay depending on the employee's recovery. DThe group plan will not pay because the employee was injured at work.

Question 8 of 15 An insured is covered by a disability income policy that contains an accidental means clause. The insured exits a bus by jumping down the steps and breaks an ankle. What coverage will apply? ANo coverage will apply, since disability income policies cover sickness only. BCoverage will apply since the break was accidental. CCoverage will apply, but will be reduced by 50%. DNo coverage will apply, since the injury could have been foreseen.

B 10 days The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

Question 8 of 15 An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? A7 days B10 days C31 days D60 days

A Increases.

Question 8 of 15 In long-term care (LTC) policies, as the benefit period lengthens, the premium AIncreases. BRemains unchanged. CLTC premiums are not based on benefit periods. DDecreases.

B Correct! A policy that has an "any occupation" provision will only provide benefits when the insured is unable to perform any of the duties of the occupation for which they are suited by reason of education, training, or experience.

Question 8 of 15 In which of the following cases would an "any occupation" disability income policy pay the benefits? AThe insured's family has unexpected expenses due to the insured's disability. BThe insured is unable to perform any jobs in the field related to the insured's education and experience. CThe insured is unable to perform the duties of his or her specific occupation. DThe insured changes jobs and is injured as a result of a more hazardous occupation.

D Insuring clause. The insuring clause is a provision on the first page of the policy that states the coverage and when it applies.

Question 8 of 15 The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the AIncontestability clause. BConsideration clause. CProbationary period. DInsuring clause.

D Rebating

Question 8 of 15 What is it called when an agent offers compensation to an applicant in exchange for business? AFraud BWaiver of premium CTwisting DRebating

BInsurer

Question 8 of 15 When a person applies for Medicare supplement insurance, whose responsibility is it to confirm that the applicant does not already have accident or sickness insurance in force? AAgent BInsurer CState government DActive physician

B Correct! The waiting, or elimination, period is the time from the onset of disability the insured must wait before becoming eligible for benefits. The shorter the waiting period, the higher the premium. After the insured satisfies the waiting period, they will receive benefits from the insurer for a limited benefit period. The longer the benefit period, the higher the premium. A disability income policy that includes the shortest waiting period and the longest benefit period would be most expensive.

Question 8 of 15 Which of the following disability income policies would have the highest premium? A15-day waiting period / 5-year benefit period B15-day waiting period / 10-year benefit period C30-day waiting period / 10-year benefit period D30-day waiting period / 5-year benefit period

Question 8 of 15 Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance? AFalse statements about financial condition of an insurer are unlawful. BStatements made with the intent to deceive are unlawful. COnly written statements can be considered fraud. DOmissions of material fact on insurance application are fraud.

A The state of New York does not allow direct or indirect participation in STOLIs. It is also illegal to use a trust, directly or indirectly, to provide funds for a STOLI transaction in a manner that violates insurable interest laws of this state.

Question 8 of 15 Which of the following is true regarding STOLIs in the state of New York? ADirect or indirect participation in STOLIs is prohibited. BThey are allowed if the policyowner did not know that the transaction was a STOLI. CThey are allowed by special permission from the Superintendent. DThey are allowed for trust-owned policies only.

A The policy will not lapse for 31 days if the premium is not paid when due. Correct! A mandatory provision of life insurance policies requires that a grace period be provided. The grace period is the period of time after the premium due date in which premiums may still be paid before the policy lapses for nonpayment of the premium.

Question 9 of 15 A policy with a 31-day grace period implies AThe policy will not lapse for 31 days if the premium is not paid when due. BThe policyholder may return the policy for a full refund within 31 days. CThe policy is incontestable after 31 days of delivery. DThe policy benefits must be paid within 31 days after a claim is submitted.

B Pregnancy will be covered immediately.

Question 9 of 15 A woman obtains health coverage through the Marketplace on October 1. Two weeks later she finds out that she is 3 months pregnant. Which of the following is true about coverage for pregnancy? APregnancy may be covered with the insurer's special approval. BPregnancy will be covered immediately. CPregnancy will only be covered if additional premium is paid. DPregnancy will not be covered as a pre-existing condition.

A Because the purchaser of a stranger-originated life insurance policy doesn't know the insured, or have any interest in the insured's longevity, STOLI policies violate the principle of insurable interest.

Question 9 of 15 Stranger-originated life insurance policies are in direct opposition to the principle of AInsurable interest. BLaw of large numbers. CGood faith. DIndemnity.

Question 9 of 15 What is the main purpose of the total disability plan? ATo pay additional monthly benefits to totally disabled individuals BTo protect individuals or families against the economic loss after a total disability of the wage earner CTo provide comprehensive coverage for disabled individuals DTo provide benefits when the insured is unable to perform any of the duties of the occupation for which they are suited by education or training

D As long as the policy is in force An insurer can contest a fraudulent misstatement as long as the policy is in force. No other statement or misstatement made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years.

Question 9 of 15 What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application? A90 days after the effective policy date B6 months after the effective policy date C1 year after the effective policy date DAs long as the policy is in force

A If an employer provides short-term disability benefits for its employees, the elimination period can be nonexistent, and the benefits can last as long as two years. The benefit typically spans 70-80% of the insured's income.

Question 9 of 15 What is the shortest possible elimination period for group short-term disability benefits provided by an employer? A0 days B30 days C60 days D90 days

B A list of available doctors The Insuring Clause lists the insured, the insurance company, what kind of losses are covered, and for how much the losses would be compensated.

Question 9 of 15 Which of the following does the Insuring Clause NOT specify? AThe name of the insured BA list of available doctors CCovered perils DThe insurance company

C It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. Correct! COBRA Act applies to only employers with 20 or more employees.

uestion 13 of 15 Which of the following statements is NOT correct concerning the COBRA Act of 1985? AIt applies only to employers with 20 or more employees that maintain group health insurance plans for employees. BCOBRA stands for Consolidated Omnibus Budget Reconciliation Act. CIt requires all employers, regardless of the number or age of employees, to provide extended group health coverage. DIt covers terminated employees and/or their dependents for up to 36 months after a qualifying event.

Question 10 of 15 Which of the following is NOT a government insurance program? A-Medicaid B-Federal Deposit Insurance Corporation (FDIC) C-Old-age, Survivors and Disability Insurance (Social Security) D-Medicare

B-Federal Deposit Insurance Corporation (FDIC)

Question 12 of 15 A key person insurance policy can pay for which of the following? ACosts of training a replacement BLoss of personal income CWorkers compensation DHospital bills of the key employee

A-Costs of training a replacement A key person insurance policy will pay for costs of running the business and replacing the employee.

Question 8 of 15 A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as ASurvivor protection BLife planning CSurvivorship insurance DJuvenile protection provision

A-Survivor protection Incorrect! Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. This is known as survivor protection.

Question 1 of 15 In a survivorship life policy, when does the insurer pay the death benefit? AUpon the last death BUpon the first death CHalf at the first death, and half at the second death DIf the insured survives to age 100

A-Upon the last death Survivorship life pays on the last death rather than upon the first death.

Question 3 of 15 All of the following are personal uses of life insurance EXCEPT AEstate creation. BCash accumulation. CBuy-sell agreement. DSurvivor protection.

C-Buy-sell agreement.

Question 7 of 15 Steven prints a pamphlet to advertise his life insurance business. In the pamphlet, he includes the full name of his insurance agency and the type of insurance that he offers. What else must he include? AThere is nothing else that Steven must include. BList of his credentials as a producer CState licensing information DAddress of his principal office

D-Address of his principal office

Question 7 of 15 The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as A-Loss. B-Exposure. C-Hazard. D-Risk.

A-Loss. Loss is the reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against.

Question 5 of 15 The mode of premium payment ADoes not affect the amount of premium paid. BIs defined as the frequency and the amount of the premium payment. CIs the factor that determines the amount of dividends in a policy. DIs the method used to compute the cash surrender value of the policy.

B-Is defined as the frequency and the amount of the premium payment. The mode refers to the frequency the policyowner pays the premium: monthly, quarterly, semiannually, or annually. The amount of premium will change accordingly.

Question 1 of 15 Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called AUnderwriting. BSuitability. CClient protection. DApproval.

B-Suitability. Insurance producers must adhere to the concept of suitability by ensuring that, to the best of their belief, the purchase, sale or exchange of a policy is in the best interest of the insured.

Question 9 of 15 Which of the following is an example of liquidity in a life insurance contract? AThe money in a savings account BThe cash value available to the policyowner CThe death benefit paid to the beneficiary DThe flexible premium

B-The cash value available to the policyowner Liquidity in life insurance refers to availability of cash to the insured. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs.

Question 15 of 15 Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT A-The loss produced by the risk must be definite. B-The loss may be intentional. C-The loss must not be catastrophic. D-There must be a sufficient number of homogeneous exposure units to make losses reasonably predictable.

B-The loss may be intentional. To insure intentional losses would be against public policy.

Question 11 of 15 Which is generally true regarding insureds who have been classified as preferred risks? AThey keep a higher percentage of any interest earned on their policies. BTheir premiums are lower. CThey can borrow higher amounts off of their policies. DThey can decide when to pay their monthly premiums.

B-Their premiums are lower. Correct! The preferred risk classification indicates that an insured is in excellent physical condition and employs healthy lifestyles and habits. These individuals qualify for lower premiums than those in the other categories.

Question 6 of 15 Which of the following is the best reason to purchase life insurance rather than annuities? ATo liquidate a sum of money over a lifetime BTo create an estate CTo liquidate a sum of money over a period of years DTo create regular income payments

B-To create an estate With insurance, the death benefit creates an immediate estate should the insured die.

Question 1 of 15 Which statement regarding insurable risks is NOT correct? A The insurable risk needs to be statistically predictable. B An insurable risk must involve a loss that is definite as to cause, time, place and amount. C Insureds cannot be randomly selected. D Insurance cannot be mandatory.

Which of the following is NOT a goal of risk retention? ATo increase control of claim reserving and claims settlements BTo fund losses that cannot be insured CTo minimize the insured's level of liability in the event of loss DTo reduce expenses and improve cash flow

Question 8 of 15 Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? AA husband or wife has an insurable interest in their spouse. BAn individual has an insurable interest in his or her own life. CA debtor has an insurable interest in the life of a lender. DBusiness partners have an insurable interest in each other.

C-A debtor has an insurable interest in the life of a lender.

Question 2 of 15 When J. applied for a life insurance policy, the agent informed him that a medical exam would be required. The exam may be completed by AA physician of the applicant's choice and at his expense. BA home office underwriter. CA paramedic or examining physician at the insurer's expense. DThe agent.

C-A paramedic or examining physician at the insurer's expense. The applicant may be allowed to select the physician or paramedic facility to perform the examination. The insurer pays the cost of such an examination.

Question 11 of 15 What documentation grants express authority to an agent? A-Fiduciary contract B-State provisions C-Agent's contract with the principal D-Agent's insurance license

C-Agent's contract with the principal Incorrect! The principal grants authority to an agent through the agent's contract.

Question 4 of 15 An individual was involved in a head-on collision while driving home one day. His injuries were not serious, and he recovered. However, he decided that in order to never be involved in another accident, he would not drive or ride in a car ever again. Which method of risk management does this describe? A-Sharing B-Retention C-Avoidance D-Reduction

C-Avoidance Avoidance is a method of risk management by which a person tries to eliminate risk of loss by avoiding any exposure to an event that could give rise to such loss. Risk avoidance is effective but seldom practical.

Question 2 of 15 Which of the following is NOT an example of insurable interest? AEmployer in employee BChild in parent CDebtor in creditor DBusiness partners in each other

C-Debtor in creditor The three recognized areas in which insurable interest exists are as follows: a policyowner insuring his or her own life, the life of a family member (relative or spouse), or the life of a business partner, key employee, or someone who has a financial obligation to them. A debtor does not have an insurable interest in the creditor.

Question 3 of 15 A producer agent must do all of the following when delivering a new policy to the insured EXCEPT ACollect any premium due. BExplain the rating procedures if the policy is rated differently than applied for. CDisclose commissions earned from the sale of the policy. DExplain the policy provisions, riders, and exclusions.

C-Disclose commissions earned from the sale of the policy.

Question 11 of 15 Which of the following best describes the MIB? AIt is a member organization that protects insured against insolvent insurers. BIt is a rating organization for health insurance. CIt is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. DIt is a government agency that collects medical information on the insured from the insurance companies.

C-It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.

Question 7 of 15 What method do insurers use to protect themselves against catastrophic losses? APro rata liability BRisk management CReinsurance DIndemnity

C-Reinsurance Insurers use reinsurance to protect themselves from catastrophic losses. This is a method where the reinsurer indemnifies the ceding insurer for part or all of the losses it sustains related to a policy issued previously.

Question 15 of 15 Which of the following best details the underwriting process for life insurance? AIssuance of policies BReporting and rejection of risks CSelection, classification, and rating of risks DSolicitation, negotiation and sale of policies

C-Selection, classification, and rating of risks Correct! The underwriting process is accomplished by reviewing and evaluating information about an applicant and applying what is known of the individual against the insurer's standards and guidelines for insurability and premium rates.

Question 11 of 15 Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount? AProfit and loss agreement BKey person agreement CSplit dollar agreement DBuy-sell agreement

D Buy-sell agreement A Buy-Sell agreement (also referred to as a business continuation agreement) is a legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled.

Question 3 of 15 Adverse selection is a concept best described as A-Underwriters slanting the odds in favor of the company. B-Poor choices of applicants to be covered. C-Only offering coverage to good risks. D-Risks with higher probability of loss seeking insurance more often than other risks.

D Correct! Adverse selection means that there are more risks with higher probability of loss seeking to purchase and maintain insurance than the risks who present lower probability. Underwriters must guard against this.

Question 3 of 15 Attempting to determine how much insurance an individual would require based upon their financial objectives is known as AHuman life value approach. BEstate planning. CViatical approach. DNeeds approach.

D-Needs approach. Incorrect! Needs method determines how much benefit would be necessary to replace the loss income and increased expense should the insured die prematurely.

Question 12 of 15 Which of the following is an example of liquidity in a life insurance contract? AThe death benefit paid to the beneficiary BThe flexible premium CThe money in a savings account DThe cash value available to the policyowner

D-The cash value available to the policyowner Liquidity in life insurance refers to availability of cash to the insured. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs.

LIFE AND HEALTH

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