study this
What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits?
2
One becomes eligible for Social Security disability benefits after having been disabled for
5
Which of these is an element of a Variable Life policy?
A fixed, level premium
Which of the following situations does NOT apply to the Florida Replacement Rule?
An existing policyholder purchases an additional policy from the same insurer
A Family Income Policy is a combination of Whole Life and
Decreasing Term insurance
Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?
Entire cash surrender value is taxable
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n)
Insuring agreement
Which statement regarding third-party ownership of a life insurance policy is true?
It is used extensively in estate-planning as well as business circumstances
Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
Life Income
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P will still receive declared dividends
Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?
Reimbursement
P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?
Sign an enrollment card
A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?
Universal Life
Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors?
Universal Life
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?
Upon completion of the application
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as
Variable Life
When does a Probationary Period provision become effective in a health insurance contract?
When a claim is submitted
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
at future dates specified in the contract with no evidence of insurability required
Medicare Part A and Part B do NOT pay for
dental work
Which of the following health policy provisions states that the producer does NOT have the authority to change the policy or waive any of its provisions?
entire contract
J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a predetermined price. What type of plan does J belong to?
hmo
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have
insurable interest in the proposed insured
Which of the following health insurance policy provisions specifies the health care services a policy will provide?
insuring clause
Which of the following is NOT a limited benefit plan?
life insurance policies
In an individual retirement account (IRA), rollover contributions are
not limited by dollar amount
An example of unfair discrimination would be
offering different terms of coverage for different policyowners having the same risk classification
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?
owners right
Insurance policies are considered aleatory contracts because
performance is conditioned upon a future occurrence
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the
policy proceeds
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a
profit-sharing plan
An individual who purchases a Life annuity is given protection against
the risk of living longer than expected
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)
Accidental Death and Dismemberment rider (AD&D)
Which rider provides coverage for a child under a parent's life insurance policy?
Child term rider
Insurance policies are offered on a "take it or leave it" basis, which make them
Contracts of Adhesion
Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?
Correct. A joint life policy covers two or more people. Using some type of permanent insurance (as opposed to term), it pays the death benefit at the first insured's death.
What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?
Decreasing term
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted when the policy is discontinued
How are Roth IRA distributions normally taxed?
Distributions are received tax-free
K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies?
Endowment at Age 65
Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?
Entire Contract Provision
What provision in a life insurance policy states that the application is considered part of the contract?
Entire Contract provision
Which of these statements describe a Modified Endowment Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits?
Full benefits are payable under the Master contract
In regards to representations or warranties, which of these statements is TRUE?
If material to the risk, false representations will void a policy
Which of the following statements about Health Reimbursement Arrangements (HRA) is CORRECT?
If the employee paid for qualified medical expenses, the reimbursements may be tax-free
A long-term care rider in a life insurance policy may trigger a benefit in the event of which of the following?
Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)
A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?
Income taxes plus a 10% penalty tax on $30,000". All withdrawals from a qualified retirement plan are taxable as current income. In addition, any withdrawals made before age 59 1/2 is subject to an additional tax penalty of 10% of the amount withdrawn.
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
Ordinary income tax and a 10% tax penalty for early withdrawal
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?
Owner's Rights
All of these are considered sources of underwriting information about an applicant EXCEPT
Rating Services
An agent selling Medicare Supplement policies must provide every applicant with a(n)
Suitability form
Which of these life products is NOT considered interest-sensitive?
Variable Universal Life
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy only if it is discovered during the Contestable period and proven to be material
A policy loan is made possible by which of these life insurance policy features?
cash value
In Florida, monthly-premium health insurance policies must provide a grace period of at least
10
A life policy loan in Florida cannot charge a fixed rate of interest higher than
10%
A person insured under a health policy is required to give the insurance company a Notice of Claim within how many days after a covered loss?
20
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20-pay Life
If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on X under the same policy, the applicant should purchase
A Whole Life Policy with Extended Term
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
Under which of the following circumstances will the benefits under COBRA continuation coverage end?
All group health plans are terminated by the employer
What action can a policyowner take if an application for a bank loan requires collateral?
Borrow against policy cash value and use as a down payment
Which type of policy would pay an employee's salary if the employer was injured in a bicycle accident and out of work for six weeks?
Business Overhead Expense
Which of these is NOT considered to be a cost connected with an individual's death?
Business expenses
How does an indexed annuity differ from a fixed annuity?
Indexed annuity owners receive credited interest tied to the fluctuations of the linked index
Which of the following statements is CORRECT about the period in which a Term Policy can be converted?
It varies according to the contracts
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
Level term
T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?
Life Annuity with Period Certain
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life
Which of the following is TRUE about a qualified retirement that is "top heavy"?
More than 60% of plan assets are in key employee accounts
Which of the following characteristics is CORRECT about Interest Sensitive Whole Life?
Mortality charges do not impact the investment amount
Which of the following is NOT an unfair claim settlement practice?
Needing written documentation of claim details
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?
When the conditions of the receipt are met
The incontestable clause allows an insurer to
contest a claim during the contestable period
A variable insurance policy
does not guarantee a return on its investment accounts
What kind of special need would a policyowner require with an Adjustable Life insurance policy?
flexible premiums
Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?
joint life
Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT
partial withdrawal features beyond a surrender charge period
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called
representations
A term life insurance policy matures
upon the insured's death during the term of the policy
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
variable
A policy that becomes a Modified Endowment Contract (MEC)
will lose many of its tax advantages
When is the face amount of a Whole Life policy paid?
When the insured dies or at the policy's maturity date, whichever happens first
Which of the following costs would a Basic Hospital/Surgical policy likely cover?
Surgically removing a facial birthmark
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
What kind of life insurance product covers children under their parent's policy?
Term rider
Which of these life insurance riders allows the applicant to have excess coverage?
Term rider
When applied to Whole Life insurance, the word "straight" denotes
The duration of premium payments
M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim?
. The correct answer is "$1,600". In this situation, $2,200 - $200 deductible x 80% = $1,600.
Which of these are NOT an example of a Nonforfeiture option?
Life Income
If an agent would like to sell Variable annuities, which state examination must the agent pass?
Life and Variable contracts
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
Long term care
If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?
Medicare Supplement
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
When a life insurance policy exceeds certain IRS table values, the result would create which of the following?
Modified Endowment Contract (MEC)
All of these statements about the Waiver of Premium provision are correct EXCEPT
Insured must be eligible for Social Security disability for claim to be accepted
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT
Interest Only
How are policyowner dividends treated in regards to income tax?
Interest on accumulations is taxed
A life insurance arrangement which circumvents insurable interest statutes is called
Investor-Originated Life Insurance
What type of renewability guarantees premium rates and renewability?
Noncancellable
A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the
Policy Loan provision
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?
Primary Insurance Amount (PIA)
The Common Disaster clause provides that if both the insured and the named beneficiary were to die in a common accident, which of the following is true?
The estate taxes in the beneficiary's estate may be reduced
Which of the following statements regarding a Tax Sheltered Annuity (TSA) is INCORRECT?
The income from the TSA is received income tax-free
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
The premiums can be lowered or raised, based on investment performance
At what point does an informal contract become binding?
When one party makes an offer and the other party accepts that offer
What type of employee welfare plans are not subject to ERISA regulations?
church
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT
free-look period has expired
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
increase face amount
Z owns a Disability Income policy with a 30-day Elimination period. Z contracts pneumonia that leaves him unable to work from January 1 until January 15. Z then becomes disabled from an accident on February 1 and the disability lasts until July 1 the same year. Z will become eligible to receive benefits starting on
march 1
An example of an unfair claims practice would be
requiring the insured to give a statement under oath