RMI EXAM 3
As of this year, Brad, age 50, has 40 credits under the Social Security program. These credits were all earned in the last 10 years. What is Brad's Insured status under the program? A) He is currently and fully insured. B) He is currently insured, but not fully insured. C) He is fully insured, but not currently insured. D) He is neither currently insured nor fully insured.
A) He is currently and fully insured.
Which of the following statements regarding health care expenditures is the United Sates is True? I. As a nation, the U.S. spends significantly more per-person on health care than most other industrialized nations. II. Health care expenditures in the U.S. are high because everyone is covered by a health insurance plan. (words it way different)
A) I ONLY ( As a nation, The US spends significantly more per-person on health care than most industrialized nations.
Which of the following statements are true about annuities? 1. Annuities are the opposite of life insurance. 2. The fundamental purpose of annuities is to replace lost income incase of premature death.
A) I Only (Annuities are the opposite of life insurance)
Which of the following statements is true with respect to joint-survivor annuity? 1. Some Joint-and-survivor annuities reduce the income payment after the first annuitant dies. 2. No payments are made after the first annuitant dies.
A) I Only(Some Joint-and-survivor annuities reduce the income payment after the first annuitant dies.)
Maria is covered under a group medical expense plan as an employee. She is also covered under her husband's plan as a defendant. If maria is hospitalized, how will each plan respond to her medical bills if both plans have the typical coordination-of-benefits provision? A) Maria's plan is primary, and her husband's plan is excess. B) Her husband's plan is primary, and Maria's plan is excess. C) The primary plan is determined by which birthday, Maria's or her husband's, is earlier in the year. D) Both plans will pay benefits on a pro rata basis. Answer: A
A) Maria's plan is primary, and her husband's plan is excess.
Which of the following is a permissible IRA investment alternative? A) mutual funds B) fine art C) antiques D) life insurance
A) Mutual Funds
One provision of the Affordable Care Act is designed to benefit young adults up to age 26. This provision allows these young adults to A) remain covered under their parents' health insurance policies. B) receive a tax credit for their health insurance premium if they are unemployed. C) receive low-interest government loans to finance their health insurance. D) receive coverage under Medicare if they are not covered by a private health insurance plan.
A) Remain covered under their parents' health insurance policies.
The Affordable Care Act requires all new medical expense plans to provide a comprehensive set of coverages and services. The comprehensive set of coverages and services that must be provided are called A) essential health benefits. B) dread disease benefits. C) long-term care benefits. D) respite care benefits.
A) essential health benefits
EFG Company experienced a reduced demand for its products during a recession. EFG managers were considering laying off some workers when the personnel director said "Lets not lay off these workers. If we do, our unemployment insurance premiums will increase. The state considers employment stability when determining our premium." Considering the firms employment record when determining the rate of charge for unemployment insurance is called A) experience rating. B) class rating. C) schedule rating. D) retrospective rating.
A) experience rating
Some physicians, hospitals, and health care organizations agree to make medical services available to insureds at discounted prices. Insureds are not required to use these entities, but if they do, care costs are less than if these entities are not used Such health care entities are called A) preferred providers. B) Health Maintenance Organizations (HMOs). C) Blue Cross/Blue Shield Plans. D) health savings accounts (HSAs).
A) preferred providers
Kristen has an individual medical expense policy with a $1,000 calendar-year deductible, a $5,000 out-of-pocket limit, and a 20 percent coinsurance requirement. Kristen was hospitalized for a surgical procedure in March, her first health care treatment received during the year. The total bill was $20,000. Considering the deductible and coinsurance, how much of this amount must Kristen pay? A) $4,400 B) $4,800 C) $5,000 D) $5,100
B) $4,800
What are the minimum age and service requirements that can be imposed on employees eligible to participate in retirement plan? A) age 18 and 6 months of service B) age 21 and 1 year of service C) age 21 and 3 years of service D) age 25 and 4 years of service
B) Age 21 and 1 year of service
A key feature of group medical expense plans is the employee being required to pay a percentage of covered expenses in excess of the deductible. This feature is A) other insurance. B) coinsurance. C) pro-rated insurance. D) reinsurance.
B) Coinsurance
Which of the following statements about group long-term disability income plans is true? A) The definition of disability becomes less restrictive after a worker has been disabled for 2 years. B) Coverage is provided for both occupational and nonoccupational disabilities. C) Benefits are increased if a worker is eligible for Social Security or workers compensation benefits. D) Maximum monthly benefits under long-term disability income plans are lower than the
B) Coverage is provided for both occupational and nonoccupational disabilities.
Which of the following statements about benefits provided by workers compensation program is true? A) Occupational disability and nonoccupational disability are covered. B) Death benefits and benefits to eligible survivors are payable if a worker is killed on the job. C) Medical benefits are usually subject to deductibles, coinsurance, and numerous exclusions. D) Retirement benefits are payable to retired workers through workers compensation.
B) Death benefits and benefits to eligible survivors are payable if a worker is killed on the job.
Which of the following statements about taxation of Social Security retirement benefits under federal law are true? I. Social Security retirement benefits are never considered taxable income. II. Up to 85 percent of Social Security retirement benefits may be considered taxable income, depending on the amount of other income received by the beneficiary.
B) II Only (Up to 85 percent of Social Security retirement benefits may be considered taxable income, depending on the amount of other income received by the beneficiary.
Which of the following are characteristics of HMO managed care plans? I. Unlimited choice of physicians and hospitals II. Emphasis on controlling the cost of covered services
B) II only (Emphasis on controlling the cost of covered services)
Dale, age 65, was dismayed to learn about all of the deductibles, co-pays,limits, and exclusions in the Medicare program. Dale bought a type insurance specifically designed to supplement Medicare, and selected his coverage from among 10 standard policies that private insurers offer. What type of health insurance did Dale purchase? A) long-term care insurance B) Medigap insurance C) major medical insurance D) viatical insurance
B) Medigap insurance
The Affordable Care Act includes a provision designed to help small employers make health insurance coverage available to their employees. This provision allows small employers to directly reduce their federal income tax by a percentage of the employer's contribution to funding health care for employees. This subsidy, in the form of reduction of income taxes, is called a A) marginal tax rate. B) tax credit. C) tax bracket. D) tax deduction.
B) Tax Credit
All of the following are circumstances under which withdrawals from traditional IRA may be made prior to age 59.5 without incurring a substantial penalty EXCEPT A) The withdrawal is in substantially equal installments paid over the individual's life expectancy. B) The withdrawal is used to pay living expenses after unemployment insurance benefits cease. C) The distribution is to the beneficiary of a deceased IRA owner. D) The withdrawal is because of income needed due to the individual's disability.
B) The withdrawal is used to pay living expenses after unemployment insurance benefits cease.
All of the following are reasons why employers self-insure medical expense plans EXCEPT A) to reduce certain costs, such as premium taxes and commissions B) to provide mandated state benefits. C) to retain funds until needed to pay claims. D) to eliminate the need to comply with separate state laws.
B) To provide mandated sate benefits.
Daryl, age 42, quit his job. His employe3r offered a defined contribution pension plan, and the balance in the account was $30,000 when Daryl quit. He can avoid immediate taxation of these funds by A) taking a lump-sum distribution. B) using an IRA rollover account. C) receiving the money through four equal installments. D) using the funds to purchase common stock issued by the former employer.
B) Using an IRA rollover account.
Which of the following statements about variable annuities is true? A) The periodic payments received by the annuitant are fixed. B) Variable annuities typically provide a guaranteed death benefit payable to a beneficiary if the annuitant dies prior to retirement. C) Insurers offering variable annuities are not permitted to charge administrative fees. D) Although the value of annuity units fluctuates, accumulation units have a fixed value.
B) Variable annuities typically provide a guaranteed death benefit payable to a beneficiary if the annuitant dies prior to retirement.
Early distributions from qualified retirement plans are assessed a 10 percent penalty tax. however, there are some exceptions to this rule. All of the following distributions would be exempt from the penalty tax EXCEPT A) distributions made after age 59.5. B) distributions made when an employee of any age changes employers. C) distributions made after the death or permanent disability of the employee. D) distributions that are part of a series of substantially equal payments over the worker's life expectancy.
B) distributions made when an employee of any age changes employers.
Kevin has an individual major medical policy that his insurer agrees to keep in force until age 65. However, the company has the right to increase the premium each year for the underwriting class in which Kevin has been placed. Which renewal provision is found in Kevin's policy? A) noncancellable B) guaranteed renewable C) conditionally renewable D) nonrenewable.
B) guaranteed renewable
Greta purchased a long-term care policy, Greta's eligibility for benefits under the policy may be triggered by A) how long premiums have been paid. B) inability to perform activities of daily living. C) continuous hospitalization for at least 60 days. D) eligibility for Medicare benefits.
B) inability to preform activities of daily living.
The Fundamental purpose of a variable annuity is to (WORDS DIFF ON TEST) A) provide funding flexibility to the purchaser. B) provide a hedge against inflation. C) fund the purchase of cash value life insurance. D) guarantee a fixed-dollar benefit throughout retirement.
B) provide a hedge against inflation.
Beth was injured at work and is eligible to receive workers compensation benefits. All of the following benefits are provided under workers compensation EXCEPT A) disability income. B) retirement benefits. C) rehabilitation. D) medical care.
B) retirement benefits
Frank is doing some life insurance planning. A financial advisor said, " be sure to consider Social Security when examining sources of funds available for family support if you die."The financial advisor was referring to which Social Security benefit? A) retirement benefits B) survivor benefits C) disability benefits D) health insurance benefits
B) survivor benefits
Under the Medicare Prescription Drug Program, a coverage gap (also called a "donut hole") exists after the beneficiary and drug plan pay a certain amount for covered drugs. The coverage gap refers to A) the large, up-front deductible that must be satisfied if the patient has a prescription for a covered brand-name drug. B) the temporary gap in coverage that begins when the beneficiary and drug plan pay a certain amount for covered drugs during the year and ends when the catastrophic limit is reached and coverage resumes. C) the temporary gap in coverage that begins after beneficiaries reach the lifetime limit on catastrophic drug expenses and ends when a new deductible is met and coverage resumes. D) the temporary gap in coverage that begins when prescription benefits terminate for beneficiaries who attain age 68 and resumes when beneficiaries attain age 72.
B) the temporary gap inn coverage that begins when the beneficiary and drug plan pay a certain amount for covered drugs during the year and ends when the catastrophic limit is reached and coverage resumes.
What is the purpose of stop-loss insurance that is used with self-insured group medical expense plans? A) to require employees to buy insurance for losses in excess of some specified amount B) to have a commercial insurer pay claims that exceed a specified limit C) to obtain administrative services from a commercial insurer D) to exempt self-insured plans from state insurance laws that require mandated benefits
B) to have a commercial insurer pay claims that exceed a specified limit.
Which of the following is a reason that social insurance programs exist? A) to compete with private insurance programs B) to provide a base of economic security C) to provide need-tested benefits to low-income individuals D) to reduce involvement of the government in insurance markets
B) to provide a base of economic security.
All of the following persons are eligible for survivor benefits under Social Security EXCEPT A) dependent parents age 62 or older. B) unmarried children between the ages of 18 and 22 who are attending college. C) a surviving spouse age 60 or older. D) a surviving spouse with eligible children younger than age 16.
B) unmarried children between the age of 18 and 22 who are attending college.
Problems with the current health care system in the United States include which of the following? I. Rising health care expenditures II. Considerable waste and inefficiency in the health care system (words it way different)
C) BOTH I and II (Rising health care expenditures and considerable waste and inefficiency in the health care system)
Which of the following is an advantage of longevity insurance? A) Death benefits are paid to a beneficiary if death occurs during the deferral period. B) The interest rate credited to the cash value is higher than what is earned on traditional life insurance. C) Monthly benefits begin at an advanced age when other assets are likely to have been depleted. D) The policyowner has unrestricted access
C) Monthly benefits begin at an advanced age when other assets are likely to have been depleted.
Which of the following statements about unemployment insurance benefits is true? A) Benefits are a flat amount regardless of a worker's previous wages. B) Because of federal legislation, the maximum benefit is the same in all states. C) Most states pay regular benefits for a maximum duration of 26 weeks. D) Under the extended benefits program, the federal government continues benefit payments for up to 3 years for workers who have exhausted their regular benefits.
C) Most States pay regular benefits for a maximum duration of 26 weeks.
Which of the following statements about workers compensation program is true? A) Injured workers must prove the employer was responsible for their injuries to collect benefits. B) Workers compensation disability income benefits (amount and duration) are uniform from state to state. C) Options available for complying with the law may include one or more of the following: self-insurance, private insurance, or insurance through a state fund. D) Most states have elective laws whereby the employer can choose whether or not to provide workers compensation coverage to employees.
C) Options available for complying with the law may include one or more of the following: self-insurance,private insurance, or insurance through a state fund.
Marion owns substantial financial assets. She was surprised that she qualified for Social Security retirement benefits when she retired because of her high investment income. What characteristic of social insurance programs is Marion overlooking with respect to her Social Security retirement benefits? A) Social insurance programs are financially self-supporting. B) Social insurance program benefits are loosely related to earnings. C) Social insurance benefits are not means tested. D) Full funding of social insurance programs is unnecessary.
C) Social insurance benefits are not means tested.
Which of the following statements about group insurance is true? A) Individual contracts are issued to each person covered under a group insurance plan. B) The cost of group insurance is usually higher on a per-person basis than the cost of individual insurance. C) The actual experience of a large group is a factor in determining the premium that is charged. D) Individual evidence of insurability is usually required.
C) The actual experience of a large group is a factor in determining the premium that is charged.
In the context of the employee benefits, the term "discrimination" refers to benefit comparisons between A) male and female employees. B) current employees and retirees. C) highly compensated employees and non-highly compensated employees. D) members of an under-represented group (by religious preference, race, or national origin) and the majority of employees.
C) highly compensated employees and non-highly compensated employees.
Vesting refers to A) the employer's right to terminate contributions if a pension plan is adequately funded. B) the employer's right to recapture employee contributions to a pension plan if employment terminates prior to retirement. C) the employee's right to the employer's contributions or benefits attributable to the contributions if employment terminates prior to retirement. D) the employer's right to discriminate against non-highly compensated employees when determining pension benefit levels.
C) the employee's right to the employer'c contribution or benefits attributable to the contribution if employment terminates prior to retirement.
One of the provisions of the Affordable Care Act provides the creation in each state of a transparent and competitive insurance marketplace where individuals and small firms with fewer than 100 employees can purchase affordable and qualified health coverage. This marketplace is called A) Medicaid plan. B) Medicare plan. C) Health Maintenance Organization (HMO). D) Affordable Health Insurance Exchange.
D) Affordable Health Insurance Exchage
Which of the following statements about the full retirement age under the Social Security program is true? A) The current retirement age for full benefits is age 62. B) Beginning in the year 2020, the retirement age will be gradually increased to age 72. C) Early retirement with reduced benefits is allowed as early as age 55. D) Delayed retirement beyond the age for full benefits increases the amount of the monthly benefit.
D) Delayed retirement beyond the age for full benefits increases the amount of the monthly benefit.
Which of the following is a characteristic of health maintenance organization (HMO) ? A) unlimited choice of health-care providers B) no premiums until care is provided C) narrow, limited, medical services provided D) great emphasis on cost containment
D) Great emphasis on cost containment
Which of the following statements about disability benefits under Social Security is true? A) There is a one-year waiting period before benefits are payable. B) Benefits are payable as long as the disabled worker is unable to perform his or her regular occupation. C) Benefits are payable only if the condition causing the disability is expected to result in death prior to age 65. D) In addition to the disabled worker receiving the benefits, benefits can also be paid to eligible dependents.
D) In addition to disabled workers receiving the benefits, benefits can also be paid to eligible dependents.
One provision of the Affordable Care Act is the creation in each state of a new and trasparent marketplace where individuals and small employees can purchase affordable, qualified, health insurance plans. This MARKETPLACE is called A) residual pool. B) catastrophic health insurance C) FAIR plan. D) insurance exchange.
D) Insurance exchange
Under one of the Medicare Advantage Plans, beneficaries can receive care at a discounted rate by using health care providers that belong to the plan network. Care outside the network is also covered, but beneficiaries must pay higher out-of-pocket costs. This type of Medicare Advantage Plan is a A) Point of Service (POS) plan. B) Medical Savings Account (MSA) plan. C) Health Maintenance Organization (HMO) plan. D) Preferred Provider Organization (PPO) plan.
D) Preferred Provider Organization (PPO) plan.
Bridget started to fund a variable annuity. Three years later, she experienced financial difficulty. She called her agent and cancelled the contract. The insurer returned all but 4 percent of the account balance. The 4 percent kept by the insurer is a(n) A) account administration fee. B) investment management fee. C) front-end load. D) surrender charge.
D) Surrender charge
Which of the following statements about group insurance underwriting principles in true? A) Employees should be required to remit premiums directly to the insurance company. B) The average age of the group should ideally increase over time. C) A group should be formed for the specific purpose of obtaining insurance. D) The employer should ideally share in the cost of a group insurance plan.
D) The employer should ideally share in the cost of a group insurance plan.
All of the following statements about traditional and Roth IRA are true EXCEPT A) Traditional IRA contributions may be fully, partially, or not income tax deductible. B) Qualified distributions from Roth IRAs are received income tax free. C) Contributions to Roth IRAs are made with after-tax dollars. D) Traditional IRAs are exempt from the penalty tax on premature distributions.
D) Traditional IRAs are exempt from the penalty tax on premature distributions.
The effect of an annual out-of-pocket limit in an individual medical expense policy is to A) limit the lifetime benefits payable under the policy. B) put a cap on annual benefits the insurer will pay. C) prevent the insured from receiving duplicate benefits if medical expenses are also covered under workers compensation insurance. D) cover 100 percent of eligible medical expenses after an insured has incurred a specified amount of out-of-pocket expenses.
D) cover 100 percent of eligible medical expenses after an insured has incurred a specifies amount of out- of- pocket expenses.
The period of time during which an employee can sign up for group insurance coverage without furnishing evidence of insurability is called A) probationary period. B) noninsurability window. C) waiting period. D) eligibility period.
D) eligibility period
An HMO physician who determine if medical care from a specialist is necessary is called A) capitator. B) internist. C) network facilitator. D) gatekeeper.
D) gatekeeper
The inability of the insured to preform some but not all of the important duties of his or her occupation is called A) residual disability. B) total disability. C) recurrent disability. D) partial disability.
D) partial disability
In order to receive unemployment insurance benefits, an unemployed worker must meet all of the following eligibility requirements EXCEPT A) have qualifying wages and employment. B) be able to work. C) be actively seeking work. D) satisfy a 6-month waiting period.
D) satisfy a 6-month waiting period.
When selling life annuities, What risk is the insurer pooling? A)bad investment performance B) premature death C) bad expense experience D) excessive longevity
D)Excessive Longevity
Type of insurance with the highest income benefit
Final Pay
TRUE OR FLASE: Under graded vesting, an employee must be at least 20 percent vested after 3 years of service and 100 percent vested after 7 years.
TRUE
Donna is single and earns $30,000 annually. She is covered under her employers retirement plan, Donna would like to start a traditional IRA and contribute $3,000 this year. Which of the following describes her ability to establish a traditional IRA and the tax treatment of her contribution? A) Her contribution is fully tax deductible. B) Her contribution is partially tax deductible. C) No portion of the contribution is tax deductible. D) Donna is not eligible to establish a traditional IRA, so no contribution can be made.
a) Her contribution is fully tax deductible.
