NY LIFE AND HEALTH FINAL

A modified Endowment Contract (MEC) is best described as: A. A life insurance contract which accumulates cash values higher than the IRS will allow B. An annuity contract which was converted from a life insurance contract C. A modified life contract which enjoys all the tax advantages of whole life insurance D. A life insurance contract where all withdrawals prior to age 65 are subject to 10% penalty

A. A life insurance contract which accumulates cash values higher than the IRS will allow

Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider? A. Can be converted to permanent coverage without evidence of insurability B. Coverage can be different for each child C. Premiums on this rider are not required until the limiting age is reached D. Increases the policy's overall cash value

A. Can be converted to permanent coverage without evidence of insurability

Proceeds of the life settlement contract could be subject to the claims of A. Creditors B. Children C. Spouse D. Beneficiaries

A. Creditors

Which of the following is a reinstatement condition? A. Proof of insurability B. Changes in the insuring clause C. Premium increase D. Premium decrease

A. Proof of insurability

A life insurance policy becomes incontestable after it has been in force for: A. 1 year B. 2 years C. 3 years D. 4 years

B. 2 years

What is the maximum amount of time the insured has to file legal action against the insurer after written proof of loss is provided? A. 1 year B. 3 years C. 5 years D. 10 years

B. 3 years

Which scenario would most life insurance policies exclude coverage for? A. A tourist traveling abroad on a major airline carrier B. An individual who has a hobby racing cars once a month C. An airline pilot who flies for a commercial carrier D. A soldier on leave at home

B. An individual who has a hobby racing cars once a month

Which of the following is an annuity that is linked to a market-related index? A. Market-related annuity B. Equity-indexed annuity C. Deferred-risk annuity D. Fixed-amount annuity

B. Equity-indexed annuity

Which of the following is true about a decreasing term life policy? A. The cash value of the policy decreases over time B. The face amount reaches zero at policy expiration. C. Premiums decrease over time but the amount of coverage remains constant. D. Commonly sold as a rider to another type of policy to provide an additional death benefit.

B. The face amount reaches zero at policy expiration.

Which market index is normally associated with an indexed annuity's rate of return? A. NAIC B. SEC C. S & P 500 D. A & P 300

C. S & P 500

Which of these is affected by the frequency of an insurance policy's premium payments? A. Settlement options B. Cash value C. Death benefit D. Cost

D. Cost

Which of the following coverage types pays a monthly cash benefit following the elimination period for total disability due to accident or sickness? A. Disability income insurance b. Credit disability insurance C. Recurrent disability insurance D. Workers compensation disability insurance

A. Disability income insurance

What is the waiver of premium provision? A. In a long term care contract, the premium is waived after the insured has been confined for a specific period of time. B. In a life insurance policy, the insured may request a waiver of premium during times of financial hardship. C. In a disability policy, the premium is waived after the insurance benefit period has been passed D. In a health insurance policy, the premium is waived after the maximum out of pocket has been paid by the insured.

A. In a long term care contract, the premium is waived after the insured has been confined for a specific period of time.

Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies? A. Joint life annuity B. Life annuity C. Survivorship life annuity D. Temporary annuity

A. Joint life annuity

An interest-sensitive life insurance policyowner may be able to withdraw the policy's cash value interest free. The provision that allows this is called: A. Partial Surrender B. Subrogation C. Automatic Premium Loan D. Accelerated Death Benefit

A. Partial Surrender

What will the beneficiary receive if an annuitant dies during the accumulation period? A. The greater of the accumulated cash value or the total premium paid B. The lesser of the accumulated cash value or the total premium paid C. The interest earned on the accumulated cash value D. Nothing

A. The greater of the accumulated cash value or the total premium paid

The right to change the beneficiary or dispose of the policy or its benefits in any manner one chooses is reserved to the policyowner UNLESS which of the following is true? A. The policyowner has named an irrevocable beneficiary. B. The policyowner has named a revocable beneficiary. C. The policyowner deems the beneficiary unfit. D. The insurer prohibits changes to beneficiaries.

A. The policyowner has named an irrevocable beneficiary.

Which of the following is TRUE regarding assignment rights for irrevocable beneficiaries? A. They are MORE likely to receive a loan based on the expectations of the proceeds. B. They are LESS likely to receive a loan based on the expectations of the proceeds. C. They can be changed without the beneficiary's consent after a life changing event. D. They are responsible for premium payment when the policyholder fails to pay.

A. They are MORE likely to receive a loan based on the expectations of the proceeds.

Which is the primary purpose of Health Reimbursement Accounts (HRAs)? A. To assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions. B. To assist covered employees on standard group health insurance plans by using post tax contributions to fund an account to pay medical expenses. C. To assist employees who work for small companies to pay medical expenses on high coinsurance policies. D. To reimburse employees who choose not to participate in the group health coverage provided by their employer.

A. To assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions.

When will a policy pay on a UCR basis? A. When particular benefits are not listed on a payment schedule B. When a surgical procedure is not pre-approved by the insurer C. When the provider charges a different amount than is listed on the payment schedule D. When the treatment is received in a different geographic area than where the insured lives

A. When particular benefits are not listed on a payment schedule

When a policy or certificate containing an accelerated benefit provision is applied for or delivered, the producer is responsible for providing the applicant a summary of coverage that includes all of the following EXCEPT A. a detailed and comprehensive summary of the accelerated benefit B. definitions of the conditions or occurrences triggering payment of the benefit C. an explanation of any effects an accelerated benefit on the cash value, death benefit, premium payments, and loans. D. a statement that benefit payments may adversely affect eligibility for Medicaid

A. a detailed and comprehensive summary of the accelerated benefit

Which of the following policy types is considered double indemnity? A. accidental death B. key employee C. term life D. whole life

A. accidental death

For an individual long-term care policy there is an annual dollar limit for tax deductions that is based on which of the following? A. age B. cost of care C. policy value D. premium cost

A. age

An individual most likely will have an insurable interest in insuring a person's life if: A. an economic interest exists for the continuance of the insured's life B. a financial interest exists at the time of insured's death C. there is any blood relationship with the insured D. a business relationship exists

A. an economic interest exists for the continuance of the insured's life

Which of the following is an example of a premium payment mode? A. annual premium payment B. payment by check C. automatic deduction of premium D. $200 per policy year

A. annual premium payment

A life settlement intermediary is a(n) A. association which maintains a facility that displays offers and counteroffers for purchasers or sellers of life settlement contracts B. person who, for a fee, solicits or negotiates a life settlement contract between a policyowner and a life settlement provider C. person who enters into a life settlement contract with the policyowner D. policyowner who sells his/her life insurance policy to a third party

A. association which maintains a facility that displays offers and counteroffers for purchasers or sellers of life settlement contracts

Which settlement option involves having the proceeds remain with the insurer and earnings paid on a monthly basis to the beneficiary? A. interest only B. dividends only C. extended interest D. fixed period

A. interest only

Current assumption whole life policies are sensitive to which of the following? A. interest rates B. age of the insured C. health of the insured D. current cash value of the policy

A. interest rates

A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n): A. partial surrender B. waiver of premium C. automatic premium loan D. grace period

A. partial surrender

A whole life insurance policy accumulates cash value that becomes: A. the policy loan value which the insured may borrow against B. the death benefit C. the source of funding for administration fees D. a source of funding a term rider to the policy

A. the policy loan value which the insured may borrow against

When does insurable interest come into play in a life insurance policy? A. when the applicant for the policy is not the insured B. when a charity is named beneficiary of the policy C. when a beneficiary is irrevocable D. when the free look period ends

A. when the applicant for the policy is not the insured

Which of these statements concerning Traditional IRAs is CORRECT? A. Earnings are not taxable when withdrawn B. Earnings are taxable when withdrawn C. Contributions are never tax-deductible D. Contributions are always made by the employer

B. Earnings are taxable when withdrawn

One of the most important considerations when replacing health insurance would be the: A. Age of the insured B. Exclusions on a new policy C. Occupation of the insured D. Cost

B. Exclusions on a new policy

Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose? A. Accelerated lifetime benefit B. Guaranteed lifetime withdrawal benefit C. Right of income rider D. Guaranteed minimum accumulation benefit

B. Guaranteed lifetime withdrawal benefit

Why is the accidental death benefit referred to as double indemnity? A. It provides for both the actual death as well as other losses from the accident B. It provides twice the face value in the policy for death due to accident. C. The beneficiaries have twice the amount of time to provide proof of loss. D. The beneficiaries must provide proof of death due to multiple causes.

B. It provides twice the face value in the policy for death due to accident.

Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested? A. Adjustable life policy B. Variable universal policy C. Universal policy D. Modified whole

B. Variable universal policy

Life insurance replacement can be best defined as: A. converting existing term coverage to a permanent policy B. a transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered C. accepting a reduced paid-up policy D. reducing the face value of an existing policy

B. a transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered

The premium for a Modified whole life policy is: A. higher than the typical whole life policy during the first few years and then lower than typical for the remainder B. lower than the typical whole life policy during the first few years and then higher than typical for the remainder C. normally graded over a period of 20 years D. level for the first 5 years then decreases for the remainder of the policy

B. lower than the typical whole life policy during the first few years and then higher than typical for the remainder

What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus? A. nonparticipating life insurance policy B. participating life insurance policy C. divisible surplus life insurance policy D. straight life insurance policy

B. participating life insurance policy

Replacement regulation is designed to protect: A. beneficiaries B. policyowners from misrepresentations and loss of benefits C. existing agents D. insurance companies

B. policyowners from misrepresentations and loss of benefits

When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax? A. when the taxpayer's medical expenses exceed 5.0% of adjusted gross income during a taxable year B. when the taxpayer's medical expenses exceed 7.5% of adjusted gross income during a taxable year C. any taxpayer who itemizes deductions may deduct their health insurance premiums D. never because only group owned health insurance premiums may be deducted.

B. when the taxpayer's medical expenses exceed 7.5% of adjusted gross income during a taxable year

Tim's individual life insurance policy has just recently lapsed. His policy may be reinstated at any time within ___ year(s). A. 1 B. 2 C. 3 D. 4

C. 3

Within how many days must a Traditional IRA be rolled over to another IRA in order to avoid tax consequences? A. 30 B. 45 C. 60 D. 90

C. 60

Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive? A. Adjustable life policy B. Modified life policy C. Endowment policy D. Universal life policy

C. Endowment policy

In which of the following does a covered employee agree to a reduction in compensation so the amount can be used to cover medical expenses? A. Consumer Driven Health Plan (CDHP) B. Health Reimbursement Account (HRA) C. Flexible Spending Account (FSA) D. Healthcare Savings Account (HSA)

C. Flexible Spending Account (FSA)

How are annuities given favorable tax treatment? A. Gains are tax deductible B. Gains are tax exempt at distribution C. Gains are taxed at distribution D. Gains are converted to tax credits

C. Gains are taxed at distribution

All of the following are characteristics of a Group Life Insurance Plan EXCEPT: A. Group underwriting B. Master contract C. Individual underwriting D. Probationary period

C. Individual underwriting

Which of these describes the result of a modified endowment contract that failed to meet the seven-pay test? A. Policy loans are disallowed B. The premium payments will be tax deductible C. Pre-death distributions are typically taxable D. Withdrawals will be prohibited

C. Pre-death distributions are typically taxable

Which of these will have the highest monthly payout upon annuitization? A. Life with period certain B. Joint and survivor life C. Straight life D. Joint life

C. Straight life

A life insurance policy which contains cash values that vary according to its investment performance of stocks is called: A. Increasing Term Life B. Modified Whole Life C. Variable Whole Life D. Adjustable Whole Life

C. Variable Whole Life

When should a buy-sell agreement include a provision for the buy-out of an owner's business interest in the event of a disability? A. When a company is newly purchased and it is likely the new owner will be disabled within a year. B. When a takeover of a company with an owner who is in ill-health occurs. C. When there is a buy-sell agreement funded with disability insurance to buyout the interest of a deceased owner or partner. D. When there is a buy-sell agreement funded with life insurance to buyout the interest of a deceased owner or partner.

C. When there is a buy-sell agreement funded with disability insurance to buyout the interest of a deceased owner or partner.

A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n): A. automatic premium loan B. nonforfeiture option C. collateral assignment D. irrevocable assignment

C. collateral assignment

All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while A. serving in the military B. living overseas C. commiting a misdemeanor D. piloting a personal aircraft

C. commiting a misdemeanor

When a decreasing term policy is purchased, it contains a decreasing death benefit and: A. increasing premiums B. level premiums C. decreasing premiums D. variable premiums

C. decreasing premiums

John the policyowner sells his life insurance policy to help pay for the cost of his terminal illness. This transaction is called a(n): A. accelerated death benefit B. cash value loan C. life settlement D. nonforfeiture option

C. life settlement

All of the following are required signatures on a life insurance application EXCEPT A. the agent. B. the applicant. C. the minor in a juvenile policy. D. the proposed insured.

C. the minor in a juvenile policy.

All of the following are characteristics of variable whole life EXCEPT A. the premium is level B. there is no guaranteed cash value C. there is no guaranteed minimum death benefit. D. the agent must be licensed in both insurance and securities.

C. there is no guaranteed minimum death benefit.

Why are dividends from a mutual insurer not subject to taxation? A. Because insurance premiums are tax-deductible Bb. Because dividends are already subject to capital gains C. Because dividends are payable directly to the policyholder D. Because dividends are considered to be a return of premium

D. Because dividends are considered to be a return of premium

Which type of business insurance is meant to cover the costs of continuing to do business while the owner is disabled? A. Disability overhead policy B. Business continuation policy C. Disability buy-sell policy D. Business overhead expense policy

D. Business overhead expense policy

Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index. What kind of policy is this? A. Modified Endowment Contract B. Current assumptive whole life C. Credit life insurance D. Equity index whole life

D. Equity index whole life

Which approach predicts a person's earning potential and determines how much of that amount would be devoted to dependents? A. Future value approach B. Earnings approach C. Needs approach D. Human life value approach

D. Human life value approach

Which of these is considered a major tax advantage of life insurance? A. Tax credits are available for life insurance premiums paid B. Annual earnings are tax free C. Premiums are tax deductible by an employee if paid for by an employer D. Income tax is typically not owed on proceeds paid directly to a beneficiary

D. Income tax is typically not owed on proceeds paid directly to a beneficiary F

A policyowner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation? A. Contingent beneficiary B. Tertiary beneficiary C. Revocable beneficiary D. Irrevocable beneficiary

D. Irrevocable beneficiary

Which of the following is TRUE of an equity-indexed annuity? A. It is a variable annuity. B. It may decrease in value. C. It requires a securities license to sell. D. It has a guaranteed minimum interest rate.

D. It has a guaranteed minimum interest rate.

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? A. Fixed period b. Interest only C. Installment refund D. Life income

D. Life income

Which of these retirement plans do NOT qualify for a federal income tax deduction? A. SIMPLE Plan B. Traditional IRA C. Keogh Plan D. Roth IRA

D. Roth IRA

Which of these statements regarding the annuitant is CORRECT? A. The contract can only be assigned by the annuitant B. The annuitant is the only individual who can surrender the contract C. The annuitant must also be the beneficiary D. The annuitant's life expectancy determines the annuity payments

D. The annuitant's life expectancy determines the annuity payments

Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called: A. estate funding B. capital withholding C. capital gains D. estate conservation

D. estate conservation

Under a non-qualified annuity, interest is taxed after the: A. deposits have been made B. death of the annuitant C. distribution of payments D. exclusion ration has been calculated

D. exclusion ration has been calculated

Which type of rider reimburses health and social service expenses incurred in a convalescent or nursing home facility? A. accelerated benefits rider B. assisted living rider C. terminal illness rider D. long term care rider

D. long term care rider

A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the: A. estate of the insured only B. estate of the deceased beneficiaries only C. named contingent beneficiaries only D. named living primary beneficiaries

D. named living primary beneficiaries

During which period of a Disability Income Policy is coverage effective but during which no benefits will be paid under the policy? A. benefit period B. elimination period C. grace period D. probationary period

D. probationary period

Which type of life policy can be continued year after year without a required medical examination but rates are dependent on the insured's current age? A. whole life B. variable life C. flexible term D. renewable term

D. renewable term

Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT: A. the producer B. the insured C. the policyowner D. the beneficiary

D. the beneficiary

If the insurer wishes to share an applicant's HIV status, the applicant must be given full notice of all of the following EXCEPT A. insurer's practices with respect to the treatment of this information. B. the applicant's rights to maintain privacy. C. an opportunity to refuse the dissemination of the information. D. the treatment procedures that are covered by the policy.

D. the treatment procedures that are covered by the policy.

Managed carterm-57e plans increase efficiency by all of the following means EXCEPT A. increasing beneficiary cost sharing. B. controlling inpatient admissions and length of stay. C. selectively contracting with health care providers. D. transferring the management of costs to the insureds.

D. transferring the management of costs to the insureds.

All of the following are requirements to qualify for Social Security disability benefits EXCEPT when A. credited with the appropriate number of quarters of coverage. B. total and permanent disabled for at least 5 months. C. disability expected to last for 12 months or end in death. D. unable to work in occupation in which the worker was trained or educated.

D. unable to work in occupation in which the worker was trained or educated.