Life and Health Review

Betty purchased a universal life policy when she was 61. Upon her 66th bday, she received sizable inheritance, paid an exceptionally large annual premium and, in doing so, violated the 7 pay test. The following year, hoping to correct the situation, she made no premium payment so that the average premiums paid were less than the 7 pay test average. Today the policy's cash value stands at $45000 and her basis in the contract is $28000. If she were to withdraw $30000 from the policy's cash value, which of the following best describes the tax treatment this transaction would receive

$13000 of the distribution is tax free but $17000 is subject to income taxation

Which of the following individuals is not eligible to contribute up to the max allowable limit to a traditional individual retirement account

Joe, age 71, who is married, has an earned income, and is not covered under an employer sponsored retirement plan

Which of the following statements regarding the estate tax treatment of life insurance owned by the insured at the insured's death is not correct

Life insurance that is owned by the insured will avoid estate tax inclusion as long as ownership is transferred to another party at least 1 year before the insured's death

A licensed independent life or health insurance producer may represent

1 or more authorized insurers

Henry owns a variable life insurance policy in which his wife, Carol, is the primary beneficiary. His son and daughter, Jacob and Charlotte, are equal secondary beneficiaries. The American Red Cross and his alma mater are listed as equal tertiary beneficiaries. If both Carol and Jacob predeceased Henry, how would the policy's death benefit be distributed at Henry's death?

Charlotte will receive 100% of the death benefit

Medical cost management is designed to

Control health claims expenses

Which of the following was enacted to protect the interests of participants in qualified benefit plan as well as group insurance plans

ERISA

Gina, age 66, has worked for the past 35 years as a dermatologist. If she decides to delay receiving Social Security benefits until her retirement three years later

Gina can delay taking income until age 69 even though she is retired, as she is not required to begin RMDs until age 70 1/2

Bob is severely injured after falling off of his roof while cleaning the gutters. If he is unable to provide proof of loss within 90 days it may

be filed up to one year after date of loss

Ann applied for a $2mil life insurance policy and paid the first premium but was later found to be uninsurable. The agent gave her a receipt that guarantees coverage until the insurer formally rejects her app. What type of receipt did she receive

binding

The fixed monthly fee paid to the healthcare provider is called

capitation fee

With interest sensitive whole life insurance

cash value fluctuates in accordance with interest rates

All of the following are mandatory health insurance policy provisions except

change of occupation

The scope of an entire contract does not include

premium computations

Which of the following is subject to the replacement regulations

sale of a new policy that causes an existing life insurance policy to be surrendered

The loaded premium is

the gross premium

An insurance producer's license will expire if he does not pay the required fee and make a renewal request by

the last day of the month of his birthday in the second year following licensure or renewal

According to the National Association of Insurance Commissioners standardized model medicare supp policy, insurers must offer coverage for all of the following core benfits except

the medicare part A deductible

Which of the following statements regarding Medicare sup insurance is incorrect

the number of standard medigap plans changes every year

When a variable annuity is purchased, who is responsible for the investment risk

the owner

The death benefit proceeds of a life insurance policy are protected from the beneficiary's creditors unless

they are paid in a lump sum

Which of the following statements pertaining to variable life insurance is correct

variable life insurance cannot be proposed in a sales situation unless the proposal is preceded or accompanied by a prospectus

Which of the following types of insurance riders is not based on term life insurance

waiver of premium

An individual may take legal action to recover on an accident and health insurance policy no sooner than how many days after written proof of loss is provided

60 days

How many days from the date of loss does the insured have to submit a completed claim form to the insurer

90 days

Louise applied for a $40,000 life insurance policy, paid the initial premium, and received a conditional receipt. All of the following statements pertaining to this situation are correct EXCEPT:

If Louise died of a heart attack 1 day before taking the required medical exam, the insurer would still pay the beneficiary the coverage stated in the application

Which of the following is an insurer

insurance producer

Kurt's medical expense policy states that it will pay him a flat $50 a day for each day he is hospitalized. The policy pays benefits on what basis

indemnity

When a cash value life insurance policy is converted into an annuity in a nontaxable transaction, that event is generally known as? A) a pension enhancement. B) a 1035 exchange. C) a modified endowment. D) a rollover.

1035 exchange

Long term care insurance is designed to provide coverage for at least how many months?

12 months

Under the required claim forms provision of health insurance policy, an insurer must furnish the claim form to the insured with how many days after receiving notice of claim

15 days

At the age of 34, Ben purchased a whole life policy with a guaranteed insurability option. How many opportunities will he have to purchase additional life insurance in the future?

2

All resident service representatives required to be licensed must complete how many hours of continuing education every two years

24 hours

Disability income benefits for partial disability typically are payable to eligible insureds for a max of

3-6 months

An insurer can cancel a policy with how many days written notice

5 days

Sarah owns a life insurance policy with a $50,000 face amount and a 10-year return-of-premium rider. She pays an annual premium of $700. If she were to die six years after purchasing the policy, what would be the total amount payable to the beneficiary?

54200

An individual health insurance policies must include a notice of claim provision requiring that a written notice of claim must be given to the insurer within how many days after the loss

60 days

Medicare supplement policies may not exclude preexisting conditions for more that how many days after the effective date of coverage

90 days

Which of the following statements regarding the Medical Information Bureau is correct

info obtained from MIB by insurers may not be used as the sole reason to decline an applicants request for insurance

FSA

is a qualified employee benefit plan and approved withdrawals are not taxed

The WY Health Insurance Pool does not cover medical costs associated with which one of the following

organ transplants

What is an authorized insurer

a company that is authorized by the Commissioner to transact insurance business in Wyoming

What is the definition of pre existing in a long term care policy

a condition for which advice or treatment was received within 6 months before effective date

A basic medical expense policy is usually written with first dollar coverage, which means it does not have

a deductible

Dying too soon is an example of

a peril

Which of the following statements regarding reinstatement of a sickness and accident insurance policy is NOT correct

a reinstated policy only covers loss due to sickness for the first 10 days

Because increasing term insurance can be added to permanent policies and, when added, is less expensive that a stand alone policy, it is almost always sold as

a rider

To supplement their income in their senior years, Harold purchased a fixed immediate annuity at age 65, naming his wife Lucy as the joint annuitant under a joint and 50% survivor annuity payout option that pays the couple $1,000 per month. If Harold were to die today, which of the following statements would be CORRECT?

Lucy would continue receiving monthly benefits of $500 for the remainder of her life

Norris is the primary beneficiary of a life insurance policy. He dies after receiving $275 per month for six years, under a 10-year period certain income option. His son, Neil, is the secondary beneficiary. Which of the following statements pertaining to this situation is CORRECT?

Neil will receive income checks in the same amount as his father for 4 years

Paul, age 62, is applying for a universal life insurance policy and wants to arrange the beneficiary designation in such a way as to use the proceeds to provide lifetime income to his wife, Marsha. Which of the following settlement options is best suited for this purpose?

Paul, as the owner, can pick life income as the settlement option his spouse must take when he dies. This option will give Marsha a monthly income she cannot outlive

Sophia has a $250000 10-year convertible term policy and would like to convert it to a permanent policy. Her agent provides her with the following information, which statement is not correct

She may convert to the permanent policy for up to 12 months following the term policy's expiration

Kelly, age 48, owns a universal life insurance policy (non-MEC) with a current death benefit of $270,000 and a cash value of $20,000. Her basis in the policy is $12,000. Kelly is interested in either borrowing or withdrawing $15,000 from this policy. What would be the tax consequences if she were to borrow the $15,000 through a policy loan?

There would be no income taxation on any portion of the amount borrowed, whether or not she repaid the policy loan

Which of the following statements pertaining to the grace period and reinstatement provisions in health insurance policies is not correct

Under a health policy's reinstatements terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement

Which of the following descriptions of life insurance policy settlement options is correct

Under an installment refund option, if the primary beneficiary dies, payments of the same amount continue to the secondary beneficiary until all installment to both beneficiaries equal original amount of proceeds

Choua applied for a $100000 whole life policy but did not pay the initial premium at the time of application. When the agent later delivers the policy, the agent must collect the premium and obtain which of the following statements from Choua

a statement of good health

All of the following individuals can be granted a temp producers license except

an applicant for resident insurance producers license

A service representative must be a full time salaried employee of

an insurer

Purchasers of Medicare supplement policies must be given a copy of

an outline of coverage

Which of the following statements regarding 1035 exchanges is not correct

annuity life insurance transfers are tax free

When the insured and beneficiary die at the same time, how must the proceeds of the policy be distributed

as if the insured had survived the beneficiary

Underwriting techniques commonly used by insurers in issuing policies to applicants who do not measure up to a standard rating include the following EXCEPT:

average total risks pending

MAG Trading Co. established a tax-qualified, long-term care insurance plan for its employees. Which of the following statements is NOT correct? A) Benefits received from the plan are subject to income tax. B) Premiums paid by MAG Trading are considered a necessary business expense for tax purposes. C) MAG Trading can take a deduction for the premiums it pays. D) MAG Trading's employees can exclude from income any employer-paid premium contributions.

benefits received from the plan are subject to income tax

Which of the following statements pertaining to limited pay life policies are correct

both limited pay and whole life policies endow at age 100

Which of the following organizations reimburses it insured for covered medical expenses

commercial insurers

When would an incontestable clause apply

concealment of smoking

Lynn elects to surrender her whole life policy for a reduced paid-up policy. The cash value of her new policy will:

continue to increase

Matteo owns a nonqualified deferred annuity that has a current value of $50000. he has 2 children. If he decided to devote this annuity solely to help pay for their education, and his goal is to max annuity payments, what is his best option

convert to an immediate annuity using a 10 year period certain annuity option

The commissioner may issue a limited license to sell

credit life insurance

Insurers that deal directly with insureds without the use of agents are known as

direct response

All of the following are common exclusions under a disability contract except

disabilities resulting from accidents

What method is used to determine the taxable portion of each annuity payment

exclusion ratio

What is tax deductible to a business

executive bonuses

What is the default nonforfeiture option

extended term

When must health insurance policies that provide coverage for family members cover newborn children

from moment of birth

All of the following are underwriting criteria for group health insurance except

geographic location of the group

Medicare K and L are characterized by which of the following features

higher coinsurance contributions

Which of the following statements regarding the optional misstatement of age provision is not correct

if the insured actually was older at the time of the app than the shown policy, the excess paid would be refunded

If an insurer terminates an insurance producer's appointment

it must notify the commissioner within 30 days of termination

Which of the following statements regarding the respite care provision under LTC policy is correct

it pays a benefit to a care giver to get away from her duties temporarily

Which of the following statements about a 1 year renewable term policy is correct

it renews with an increase in premium on the insured's age

An application for health insurance completes the application and satisfies all of the following conditions of the conditional receipt. If the policy is eventually issued as applied for, coverage takes affect

just as if the policy had already been issued

Which of the following dividend options produces a result similar to taking dividends in cash and depositing them in a bank savings account

leaving dividends to accumulate interest

Which of the following statements about insurance consultant licensing is correct

licenses remain in effect for 24 months

Which of the following is NOT a basic form of health insurance coverage

limited pay health

Which of the following statements regarding limited pay life insurance is not correct

limited pay policies mature more quickly than do continuous premium whole life policies

What is not an annuity premium factor

medical history

An insurance producers license contains all of the following information except

name of appointing insurer

A life insurance gross premium is

net single premium plus expense

An insured may apply for reinstatement of a life policy after voluntarily surrendering the life policy

never

When can a producer whose license was revoked apply for a new license

one year after the license was revoked

All of the following producer acts would be a violation of WY insurance law except

paying dividends to participating policyholders

Which of the following is not a common health insurance exclusion

plastic surgery to repair scar tissue

All of the following provisions are optional individual health insurance policies except

preexisting condition provision

Which of the following statements regarding medical expense policies for people who are self employed is not true

premiums are not taxable

Which of the following statements regarding business life insurance policies is not true

premiums are tax deductible, except for executive bonus plans

How can an insured access all or a portion of a life insurance benefit to pay for a long term illness or life threatening disease

purchase and accelerated benefit rider

A producer offers a prospective buyer a job with his agency to induce him to purchase a policy. if the prospect purchases the policy and accepts the job the producer will be guilty of

rebating

Maynard earns $70000 a year. Under most disability income policies, the maximum amount of monthly benefit he will receive is $7000 a month. Under the relation to earnings to insurance provision, his disability income benefit will be

reduced, and he will be refunded for any premiums he paid for excess coverage

Which of the following statements regarding required min distributions is not correct

required min distributions must occur no later than age 59.5

When replacement is involved in a transaction, the insurance producer must do all of the following except

return part of the first premium to the policy holder

Which of the following is subject to replacement regulations

sale of a new policy that causes an existing life policy to be surrendered

An insurance producer's license may be revoked for engaging in all of the following activities except

soliciting relative for life insurance

Another name for an entity plan

stock redemption plan

Maureen, age 62, owns a non-MEC whole life insurance policy with a death benefit of $200,000 and a cash value of $40,000. Her basis in the policy is $25,000. If she were to borrow $30,000 from this policy and then die immediately thereafter (without having repaid any portion of the loan), which of the following best describes the resulting tax treatment that of the policy's death benefit?

the 170000 will be paid to beneficiary, all which is income tax free

Period of which annuity benefits are received

the annuitization period

A morality table reflects

the average number of deaths that will occur during a given year for a given age group of individuals

An accidental death and dismemberment policy rider's principal sum is equal to

the death on the base life insurance policy

Which of the following statements about accelerated benefit provisions is not correct

the insured must be expected to die within 6 months

Under a group life plan, eligible dependents of an insured employee could include all of the following except

the insureds in laws

A certificate holder will lose their coverage under a group life plan due to any of the following except

the insurer increases the premium

Which of the following statements regarding conditionally renewable policy is not correct

the insurer may refuse to renew the contract as the result of the insured's deteriorating health

When a life insurance beneficiary is revocable

the policyowner can change that beneficiary at any time with written notice

Which of the following statements regarding insurers is correct

the primary purpose of an insurance company that is organized as a stock insurer is to earn profit for its stockholders

All of the following statements about insurance brokers are correct except

they represent the insurer in an insurance transaction

Rachel added a Social Security rider to her individual disability income plan. This rider provides an additional monthly benefit for what purpose?

to ensure that a projected level of benefit is received

Which of the following statements regarding to the grace period and reinstatement provisions in health insurance policies is not correct

under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement