Michigan LAH Exam

When an annuity is written, whose life expectancy is taken into account? a. beneficiary b. annuitant c. Life expectancy is not a factor d. owner

b. annuitant

If the annuitant dies during the accumulation period, who will receive the annuity benefits? a. Estate b. Insurance Company c. Beneficiary d. Owner

c. Beneficiary

Employer contributions made to a qualified plan a. have no vesting requirements b. are taxable to the employee c. are subject to vesting requirements d. are not tax deductible

c. are subject to vesting requirements

An insured has a major medical policy with a $500 deductible and 80/20 co insurance. The insured is hospitalized and sustains a $2500 bill. What is the maximum amount that the insured will have to pay? a. $900 b. $2500 c. $500 d. $2000

a. $900

Fixed annuities may provide all of the following except: a. Equal monthly payments for life b. Hedge against inflation c. Future income payments d. Minimum guaranteed rate of interest

b. Hedge against inflation

An insured's hospital policy states that it will pay him a flat fee of $75 a day for each day of hospitalization. The policy pays benefits on what basis? a. Reimbursement b. Indemnity c. Expense Made d. Service

b. Indemnity

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income? a. Both principal and interest b. Interest only c. Principal only d. Neither principal or interest

b. Interest only

What is the shortest possible elimination period for group short-term disability benefits provided by an employer? A. 30 Days B. 60 Days C. 90 Days D. 0 Days

D. 0 Days

Which of the following would be likely to establish a SEP? A. Military Personnel B. The elderly C. Low income individuals and families D. A small employer

D. A small employer

What would be the deductible for basic surgical expense insurance? a. $50 b. $1,000 c. $0 d. $100

c. $0

In group insurance, what is the policy called? a. Certificate of coverage b. Entire contract c. Master policy d. Individual policy

c. Master policy

Which of the following is NOT an example of a preventative care service? A. Annual physical exam B. Mammogram C. Flu Shot D. Chemotherapy

D. Chemotherapy

The time limit on Certain Defenses provision is the same as which of the following: A. reinstatement B. Grace Period C. Payment of claims D. Incontestability

D. Incontestability

How long does an insurer have to contest fraudulent misstatements made in a health insurance application? a. As long as the policy is in force b. Within 2 years of the policy application c. Statements on the application are incontestable d. Within 1 year after the effective policy date

a. As long as the policy is in force

The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured's a. Attained age b. Issue age c. Dependents' ages d. Average age

a. Attained age

Which of the following is a specified dollar amount the insured must pay before the insurer will pay the policy benefits? a. Deductible b. A nominal fee c. Coinsurance d. Premium

a. Deductible

Which of the following is NOT a cost-saving service for insurance companies? a. Denial of coverage b. Second opinions c. Preventative care d. Preadmission testing

a. Denial of coverage

Which of the following features of a dental expense plan is NOT typically found in a medical expense insurance plan? a. Diagnostic and preventative care b. Low cost deductibles c. A low monthly premium d. Medical records

a. Diagnostic and preventative care

A waiver of premium rider will most likely be included with which of the following types of health insurance policies? a. Disability Income b. Basic Medical c. Limited Benefit d. Hospital indemnity

a. Disability Income

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the: a. Incontestability clause b. Insuring clause c. Misstatement of age clause d. Reinstatement clause

a. Incontestability clause

An individual buys a flexible premium deferred life annuity with a 20-year period certain. What would the beneficiary receive if the annuitant died 5 years after beginning the annuity phase? a. Payments for 15 years b. Nothing c. Payments for 20 years d. Payments for life

a. Payments for 15 years

Which renewability provision are you most likely to see on a travel accident policy? a. Period of time b. Non-cancellable c. Guaranteed renewable d. Optionally renewable

a. Period of time

If an insured under a disability income policy changes jobs to a more hazardous occupation after the policy has been issued, when a claim is filed, the insurance company should do which of the following? a. Reduce the benefit in accordance with the increased risk b. Increase the premium c. Deny the claim d. Exclude coverage for on-the-job injury

a. Reduce the benefit in accordance with the increased risk

The advantage of qualified plans to employers is: a. Tax-deductible contributions b. Taxable contributions c. No lump-sum payments d. Tax Free earnings

a. Tax-deductible contributions

Which of the following best describes taxation during the accumulation period of an annuity? a. Taxes are deferred b. The annuity is subject to state taxes only c. Growth is subject to immediate taxation d. The annuity is subject to both state and federal taxation

a. Taxes are deferred

A 403(b) tax sheltered annuity is available for: a. Teachers and non profit organizations b. Government workers c. Self-employed persons d. Postal employees

a. Teachers and non profit organizations

In group insurance, the contract is between a. The employer and the insurer b. The group sponsor and the employer c. The employee and the employer d. The individual insured and the insurer

a. The employer and the insurer

Which of the following will vary the length of the grace period in health insurance policies? a. The premium payment mode b. The length of the elimination period c. The amount of premium paid d. The policy term

a. The premium payment mode

The accelerated benefits provision will provide for an early payment of the death benefit when the insured: a. becomes terminally ill b. needs to borrow money c. becomes disabled d. has earned enough pre-death credits

a. becomes terminally ill

If the beneficiary wants a guarantee that policy proceeds will be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? a. fixed period b. paid up option c. fixed amount d. life income

a. fixed period

Which of the following policies would not offer a policy loan option? a. level term life b. single premium whole life c. variable life d. universal life

a. level term life

The annuity period is best defined as the time during which the annuitant: a. receives payments b. pays into the annuity c. retires d. accumulates money

a. receives payments

If an insured dies during the grace period, what is the insurance company obligated to pay? a. the face amount minus any owed premium b. the cash value of the policy, if any c. a refund of all paid premiums d. the full face amount of the policy

a. the face amount minus any owed premium

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is a. An accelerated policy b. A modified endowment contract c. A nonqualified plan d. An endowment

b. A modified endowment contract

SIMPLE Plans require all of the following EXCEPT a. No other qualified plan can be used b. At least 1,000 Employees c. Employees must receive a minimum of $5,000 in annual compensation d. No more than 100 employees

b. At least 1,000 employees.

An annuitant has been making periodic premium payments into an annuity. The income payments are scheduled to begin 2 years after the annuity purchase. What type of annuity is it? a. Flexible premium b. Deferred c. Fixed d. Immediate

b. Deferred

The policy insured and the application for insurance are combined together to form the a. Insuring Clause b. Entire Contract c. Certificate of insurance d. Whole policy

b. Entire Contract

If taken as a lump sum, life insurance proceeds to the beneficiaries are passed a. Part tax free and part are taxable b. Free of federal income taxation c. without interest d. as tax deductible

b. Free of federal income taxation

If a retirement plan or annuity is "qualified", this means: a. It accepts after-tax contributions b. It has favorable tax treatment c. It has no penalties for early withdrawal d. It is noncancelable

b. It has favorable tax treatment

the form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called: a. Joint and survivorship b. Life income with period certain c. Life income with refund d. Joint life annuity

b. Life income with period certain

An insured had paid only part of her total number of IRA premiums before she died. What effect will this have on the insured's estate? a. Any IRA funds will be directed to the state b. Only the premiums paid will be included in the estate c. IRAs have no effect on estates d. Premiums left unpaid will be deducted from the estate

b. Only the premiums paid will be included in the estate

Which of the following plans is a combination of an HMO and a PPO plan? a. Blue Cross/Blue Shield b. Point of Service c. Flexible Savings Account d. Health Savings Account

b. Point of Service

Which of the following may contribute to an HR-10 plan? a. Corporate executive b. Self Employed plumber c. Manager of a store d. Partner with at least 5% ownership

b. Self Employed plumber

An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable? a. Annuitant b. Spouse c. Dependents d. Charitable organization

b. Spouse

Which of the following sets the limits for a health reimbursement account (HRA)? a. State statutes b. The employer c. The insurer d. Federal Statutes

b. The employer

Which of the following is true regarding taxation of accelerated benefits paid under a life insurance policy? a. They are taxable to the insured's estate b. They are received tax free c. They are tax deductible d. They are considered taxable income

b. They are received tax free

The waiver of cost rider is found in what type of insurance? a. Credit life b. Universal life c. Whole life d. Juvenile life

b. Universal life

A week after an insured receives a new life policy, he decides to return it and requests a refund of premium. What provision gives the insured the right to return the policy? a. waiver of premium b. free look c. grace period d. consideration

b. free look

An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner. What dividend option could she use? a. Accumulation at interest b. paid-up option c. reduction of premium d. one-year term

b. paid-up option

which of the following is an example of limited accident and health policy? a. A Medicare policy b. A basic medical policy c. A dread disease policy d. A long-term care policy

c. A dread disease policy

At what age can a participant receive distributions from a qualified plan without incurring a 10% penalty? a. Age 55 1/2 b. At any age c. Age 59 1/2 d. Age 59

c. Age 59 1/2

Which of the following is not true regarding an annuity certain? a. There are no life contingencies b. IT is a short term annuity c. Benefits stop at the annuitant's death d. it will pay until a fixed amount is liquidated

c. Benefits stop at the annuitant's death

If the insured is NOT required to pay a deductible, what type of coverage does the insured have? a. Comprehensive b. Reimbursement c. First Dollar d. Major Medical

c. First Dollar

Who would be allowed to catch-up contributions in an individual qualified plan? a. An IRA owner who contributes less than the allowed maximum amount b. Individuals who have dependents c. Individuals age 50 or older d. Anybody who has a traditional IRA

c. Individuals age 50 or older

which of the following reasons for an early distribution of funds from a qualified retirement plan would incur a 10% penalty? a. Death of participant b. Participant's disability c. Participant's debt d. A divorce decree

c. Participant's debt

In what type of a medical insurance plan does the provider receive a scheduled fixed amount for care to the insured and no additional compensation regardless of the services provided? a. Reimbursement b. Indemnity c. Prepaid d. Fee-for-service

c. Prepaid

A Policy owner wants to name her husband as the beneficiary on her disability policy. She also wishes to retail all of the rights of ownership. What beneficiary classification is appropriate in this situation? a. Contingent b. Irrevocable c. Revocable d. Primary

c. Revocable

Which of the following transaction in an annuity will cause immediate taxation of the interest earned? a. Failing to make a planned contribution b. Using the contract as collateral for a loan c. Surrendering the annuity for cash d. Changing a settlement option

c. Surrendering the annuity for cash

How does a member of an HMO see a specialist? a. The insurer chooses the specialist b. HMOs do not cover specialists c. The primary care physician refers the member d. The member is allowed to choose any specialist

c. The primary care physician refers the member

An employee insured under a group health plan has been paying $25 monthly premium for his group health coverage. The employer has been contributing $75, for the total monthly cost of $100. If the employee leaves the company, what would be his maximum monthly premium for COBRA coverage? a. $100 b. $75 c. $29 d. $102

d. $102

A major medical policy lapses but is reinstate within an acceptable time frame. How soon from the reinstatement date will coverage for accidents become effective? a. After 90 days b. After 30 Days c. After 10 Days d. Immediately

d. Immediately

When an employee covered under an HRA changes employers, what happens with the HRA account? a. It follows the employee b. It must be returned to the insurer c. It is divided between the employee and the employer d. It remains with the employer

d. It remains with the employer

In which of the following scenarios would an "Any occupation" disability income policy pay the benefits? a. L is unable to perform any duties of her specific occupation b. M needs to cover expenses for collage tuition following a disability c. N's family has unexpected expenses due to N's disability d. J cannot perform any jobs in the field related to his education and experience.

d. J cannot perform any jobs in the field related to his education and experience.

Who is involved in completing the agents report? a. The agent and the applicant b. Attending physician and the agent c. Only the underwriter d. Only the agent

d. Only the agent

An underwriter may reject an application for health insurance if the rejection is based upon which of the following? a. Blindness b. Sexual orientation c. Genetic characteristics d. Prescription drug usage

d. Prescription drug usage

What annuity settlement option provides income payments to the annuitant for the rest of the annuitant's life and ceases at the annuitant's death? a. Joint and survivor b. Installment refund c. Life with guaranteed minimum d. Pure life

d. Pure life

What is the primary purpose of a 401(k) plan? a. Dividends over a certain period b. Education funds c. Life insurance distribution d. Retirement

d. Retirement

An annuity would normally be purchased by an individual who wants to: a. Earn a higher rate of interest b. Create an immediate estate c. Provide a death benefit to the surviving family d. Secure income for retirement

d. Secure income for retirement

which of the following would be responsible for making premium payments in an HMO plan? a. Insured b. Payor c. Producer d. Subscriber

d. Subscriber

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the policy proceeds will go to: a. Probate b. The beneficiary's estate c. The State d. The insured's estate

d. The insured's estate

An insured may reactivate a lapsed life insurance policy within a specified period of time, with proof of insurability. Which policy provision allows this? a. incontestability b. waiver of premium c. grace period d. reinstatement

d. reinstatement