Life, Disability, and Health Insurance

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?

$100,000

A producer's license lapsed. How soon after this lapse can his license be reinstated?

1 Year

Under Utah Mini-COBRA, eligible employees may extend their group coverage for

1 year

For group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?

100%

How many days does an insurer have to file a notice of appointment for a producer?

15 days

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?

18 months

Each insurer must maintain a complete file containing every printed, published or prepared advertisement of its policies for a period of at least...

3 years

How long is the open-enrollment period under an employer group health insurance plan?

30 days

The maximum number of employees that a small employer can have is

50

How many eligible employees must be included in a contributory plan?

75%

Insured A has coverage for maternity benefits in her health insurance plan. She has recently adopted a baby. In order for the adoptive indemnity benefit to become effective, within how many days of the baby's birth should the adoption take place?

90 Days

A hospital indemnity policy will pay

A benefit for each day the insured is in a hospital.

What is a Payor Benefit Rider?

A rider may be added to the policy of a juvenile stating that if the payor (the one paying the premium) dies or becomes totally disabled prior to the juvenile's reaching majority, the subsequent premiums due are automatically waived.

Which of the following is another term for an authorized insurer?

Admitted

In which Medicare supplemental policies are the core benefits found?

All plans

Under the 401(k) bonus or thrift plan, the employer will contribute

An undetermined percentage for each dollar contributed by the employee.

Under a key person disability income policy, premium payments

Are made by the business and are not tax-deductible

How many members does an association need to be eligible for group insurance?

At least 100

Describe a MEWA

At least 2 employers. Can be sponsored by an insurance company, an independent administrator, or another group established to provide group benefits for participants.

What protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic Premium

Which of the following options best depicts how the eligibility of members for group health insurance is determined?

By conditions of employment (e.g. full time vs. part time, salary vs. hourly)

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Common Disaster

What size companies are eligible for health reimbursement accounts (HRAs)?

Companies of all sizes

What is the return of unused premiums?

Dividends

What makes a business eligible for SIMPLE Plans

Employ no more than 100 employees receiving at least $5,000 in compensation from the employer during the previous year

What type of tax is associated with death proceeds from a life insurance policy?

Federal Estate Tax

Life insurance death proceeds are

Generally not taxed as income

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to what?

Guaranteed Surrender Value

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

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.

What is a 1035 exchange?

In accordance with section 1035 of the internal Revenue Code, certain exchanges of life insurance policies and annuities may occur as nontaxable exchange.

The benefits received by the business in a Disability Buy-Sell policy are

Income tax free

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?

Indemnity

Describe a bail-out provision.

It allows the owners to surrender the annuity without a charge.

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is "over-funded" or if it's a Modified Endowment Contract. In other words, the cumulative premiums paid during the first seven years of a policy must not exceed the total amount of net level premiums that would be required to pay the policy up using guaranteed mortality costs and interest.

Which type of care is NOT covered by Medicare?

Medicare

An insured is covered under a Medicare policy that provides a list of network healthcare providers that the insured must use to receive coverage. In exchange for this limitation, the insured is offered a lower premium. Which type of Medicare policy does the insured own?

Medicare Select

In a POS plan, benefits for covered services when self-referring are generally...

More expensive

What is an MET?

Multiple Employer Trust: A legal trust established by a plan sponsor that brings together a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or self-funded basis.

What is a MEWA?

Multiple employer welfare arrangement; a way for a group of employers to pool their resources to get their employees better health-insurance options.

What income taxation will be imposed on the benefits received from a long-term care plan?

No tax

Death benefits payable to a beneficiary under a life insurance policy are generally

Not subject to income taxation by the Federal Government

A rider attached to a life insurance policy that provides coverage on the insured's family member is called the..

Other-insured rider

Describe the taxes on Key Person disability insurance

Premiums are not tax deductible to the business, but the benefits are received income tax free by the business.

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

Prepaid Plan

What would a physician utilize if they wanted to know if a treatment is covered under an insured's plan and at what rate it'll be paid?

Prospective Review

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?

Pure Life

Which type of retirement account does not require the owner to start taking distributions at age 73?

Roth IRA

An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of

Stranger-Oriented Life Insurance (STOLI)

When an annuity is written, whose life expectancy is taken into account?

The Annuitant

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?

The death benefit will be smaller

Who can make changes to the policy once it is in effect?

The executive officer of the insurer

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to

The insured

When an applicant applies for Medicare supplement insurance, whose responsibility is it to confirm whether the applicant has an accident or sickness insurance policy in force?

The insurer

An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?

The interest will continue to accumulate tax deferred.

Twins brother and sister each purchased a retirement annuity. When they retired at the same time, each selected the life income option. Both have similar life styles and are in good health. Which of the following is true with respect to their monthly annuity payments?

The man's payments will be larger (because woman's life expectancy will be greater)

Hospice care is intended for

The terminally ill

How are HMOs divided?

They are divided by geographic territories

Which of the following is true regarding benefits paid to disabled employees?

They may be subject to taxation if the premium was paid by the employer

In direct transfer, how is money transferred from one retirement plan to a traditional IRA?

Trustee to trustee

Which Life Insurance policies would be considered interest sensitive?

Universal Life

When would life insurance policy proceeds be included in the insured's taxable estate?

Where there are any incidents of ownership at the time of death.

Which of the following is NOT true of basic medical expense plans?a)Coverage for catastrophic medical expenses b)No deductibles c)First-dollar coverage d)Low dollar limits

a) Coverage for catastrophic medical expenses (Basic medical expense plans were characterized by first-dollar coverage (no deductible) and low dollar limits, which meant they afforded no protection to an individual or family against catastrophic medical expenses that could be financially disastrous.)

Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account? a)Joe is 40 and is not covered by any other health insurance b)Amanda is 67 and is covered by a basic medical expense policy c)Andy is 55 and is covered under a dental care policy d)Jenny is 60 and also has a long-term care insurance plan

b) Amanda is 67 and is covered by a basic medical expense policy (to be eligible for a Health Savings Account an individual must be covered by a High Deductible Health Plan, must not be covered by other health insurance, must not be eligible for medicate, and can't be claimed as a dependent.)

Which of the following is TRUE about credit life insurance? a)Debtor is the policy beneficiary. b)Creditor is the policyowner. c)Debtor is the annuitant. d)Creditor is the insured.

b) Creditor is the policyowner

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? a)It must be assumed that the death of the insured will occur immediately. b)Need is predicted using the number of years until the insured's retirement. c)Coverage is based on the predicted needs of that family. d)The death of an insured must be premature.

b) Need is predicted using the number of years until the insured's retirement.

All of the following are true of key person insurance EXCEPT a)The key employee is the insured. b)The plan is funded by permanent insurance only. c)There is no limitation on the number of key employee plans in force at any one time. d)The employer is the owner, payor and beneficiary of the policy.

b) The plan is funded by permanent insurance only (key person coverage may be funded by any type of life insurance)

According to Utah Mini-COBRA, which of the following would NOT qualify for extended coverage of a group health insurance plan? a)An employee who took a leave of absence b)An employee who was involuntarily terminated c)An employee who became eligible for a similar coverage d)A dependent spouse divorced from the eligible employee

c) An employee who became eligible for similar coverage

Which of the following is TRUE of a qualified plan? a)It may discriminate in favor of highly paid employees. b)It may allow unlimited contributions. c)It has a tax benefit for both employer and employee. d)It does not need to have a vesting schedule.

c) It has a tax benefit for both employer and employee

Which of the following riders would NOT increase the premium for a policyowner? a)Payor benefit rider b)Waiver of premium rider c)Multiple indemnity rider d)Impairment rider

d) Impairment Rider

Which of the following statements does NOT accurately describe an insurance broker? a)A broker is not a direct representative of an insurer. b)A broker cannot bind coverage. c)Brokers must have a written agreement with an insured when they receive any fees or compensation for services. d)None of the above. All are true.

d) None of the above. All are true.

Which of the following riders would NOT cause the Death Benefit to increase? a)Guaranteed Insurability Rider b)Cost of Living Rider c)Accidental Death Rider d)Payor Benefit Rider

d) Payor Benefit Rider

What are the three types of enrollment for Medicare?

initial enrollment period, general enrollment period and special enrollment period.