FINA 470 Exam 2
A beneficiary can only receive the death benefits by lump-sum
false
An inflation protection option need not be offered
false
As people age, the odds of disability goes down
false
Benefits paid from DI policies is usually around 100% of pre-disability income
false
Benefits paid from an individual DI policy are taxable income
false
Continent beneficiaries can receive the policy death benefits even if the primary beneficiary is still alive
false
Driving is an Activity of Daily Living (ADL)
false
Entity purchase is the only form of a Buy-Sell agreement
false
In a Universal Life policy, the Insured/owner directs the investment portion
false
Medicare will provide LTC benefits similar to LTC insurance policies
false
Most term policies are paid out as claims
false
One dividend option would be to purchase a Disability Income Protection Policy
false
Skilled nursing care can be performed by anyone
false
Taking a loan from a life insurance policy is a taxable event
false
The Human Life Value method is the most comprehensive way to determine a life insurance death benefit
false
The insured of the policy is the person who can exercise the economic right in the policy, and typically pays the premiums on the life insurance policy
false
The suicide clause states that if the insured dies by suicide, death benefit payments will not be paid out
false
Universal Lie A and B are both the same cost
false
Variable Life is strictly invested in money market funds
false
"Any" occupation is the most liberal definition of disability
false most restrictive
Kevin has an individual disability income policy that his insurer agrees to keep in force until age 60. 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?
guaranteed renewable
long-term care services are provided in a variety of settings
home community residential setting institutional setting (nursing home)
Most term policies have a provision to convert to whole life without evidence of insurability for a particular period (may be less than the full term
true
Nonforfeiture options are different than dividend options
true
Policy terms can be as long as age 65
true
Second-to-die policies provide death benefits when second-or-last insured dies
true
Self-funding LTC expenses are never a viable option
true
Short-term DI is offered at the group level
true
Some LTC policies may exclude coverage for some conditions
true
Sources of disability income include government sources
true
Term insurance is pure insurance protection
true
The Accelerated death benefit option allows the policy owner the right to withdraw the death benefit before dying as long as they meet the requirements
true
The Owner/Insured directs the investments in a Variable Universal Life policy
true
The basic form of Whole policies are inflexible death benefits and premiums
true
The elimination period could be considered a "time-deductible"
true
The maximum benefit a LTC policy paid over a term of years is called a benefit pool
true
The premium is one of many criteria considered regarding a LTC policy
true
There are three types of term insurance policies: -Annually renewable -Level term -Decreasing term
true
Types of LTC include Assisted Living
true
Whole Life cash values usually have a minimum guaranteed rate of interest.
true
Whole Life policies provide protection for the entire life of the insured (assuming premiums are paid)
true
LTC insurance is transferring the risk to the insurance company for chronic care needs for an extended time
true
MEC prevent policy owners from using the life insurance policy as a tax shelter, not an insurance product
true
Misstatement of age or gender is considered an unintentional mistake
true
Joe is 60 years of age and his wife Sandy is 56. Joe and Sandy decided to take a dream vacation and borrowed from their life insurance policies. Sandy's policy was a MEC, but Joe's was not. If they each borrowed $5,000 and they are in the 25% income tax bracket, what taxes will they pay on the loans?
$1,750
Denise's employer provides $500,000 of group term life insurance. If Denise dies today, how much of the life insurance proceeds will be subject to income taxes?
0
Estate preservation is one reason to purchase life insurance
true
Group life insurance premiums may be taxable if paid by the employer
true
All the following will tend to increase the cost of long-term care insurance, EXCEPT:
An increase in the elimination period
If you own a life insurance policy, the death benefit will be included in your gross estate
true
Which of the following statements concerning universal life insurance is (are) correct? 1. The policyowner has no ability to direct the investment of the policy's cash values. 2. Universal life policyowners can choose the amount of premium they pay into their policies, subject to insurer minimums and maximums.
Both 1 and 2
Which of the following statements concerning the definitions of total disability used in individual disability income policies is correct?
Currently, insurers are more likely to use a more restrictive definition than own-occupation.
What are activities of daily living (ADLs)?
Eating Bathing Dressing Transferring Toileting Continence
Which of the following statements about disability and disability income insurance is (are) true? I.Most disability income policies replace 100 percent of gross earnings. II.The probability of being disabled before age 65 is much higher than commonly believed.
II only
Which of the following statements about long-term care insurance is (are) true? I.Long-term care insurance is inexpensive, especially if purchased at older ages. II.Purchasers have a choice of daily benefits and benefit periods.
II only
What is the typical trigger for payment of benefits under a long-term care insurance policy?
Inability to perform at least two activities of daily living
All the following statements concerning term life insurance are correct, EXCEPT:
It is usually not renewable.
All the following statements concerning the second-to-die policy are correct, EXCEPT:
It pays half the death benefit at the first death and the other half upon the second death.
All the following statements concerning universal life insurance are correct, EXCEPT:
It prohibits cash withdrawals.
All the following are advantages of whole life insurance, EXCEPT:
It provides a hedge against inflation.
Which of the following statements concerning the federal income tax treatment of individual disability income insurance is correct?
Premiums are not deductible, and benefits are tax-free.
All of the following statements about long-term care insurance are true EXCEPT
Premiums can be reduced by electing shorter elimination periods.
In a Universal Life policy, the Owner determines the frequency and amount of each premium
true
Which of the following statements about group short-term disability income plans is true?
The amount of disability income benefits typically is equal to some percentage of a worker's normal earnings.
When are dividends from a life insurance policy taxable income?
The dividends exceed the amount of premiums paid.
Ajax Corporation has a group disability income insurance plan covering its employees. Ajax pays ¾ of the premium cost, and the employees pay ¼. In this situation, which of the following statements concerning the federal income tax aspects of the plan is correct?
The employer's share of the premium cost is deductible for the employer.
Which of the following statements describes a typical "benefit trigger" under a long-term care contract?
The person is unable to perform at least two activities of daily living.
When is the payment of a death benefit on a life insurance policy subject to income tax?
The policy was transferred to a viatical company.
All the following statements concerning loans taken under life insurance policies are correct, EXCEPT:
The policyowner can borrow a maximum of 50% of the policy's cash value.
All of the following statements regarding a MEC are correct EXCEPT:
Withdrawals from a MEC are subject to FIFO tax treatment
Individual long-term care insurance policies may cover which of the following types of care? I Custodial care II Assisted-living care III Adult day care centers
all are correct
Which of the following are advantages of universal life insurance? The policyowner may make partial withdrawals of cash values. It can be exchanged for other kinds of life insurance. It provides permanent protection. It provides tax-deferred investment income.
all four are correct
Which of the following statements concerning disability income insurance is (are) correct? I It covers periods when the insured is unable to work because of injury or sickness. II It is designed to restore at least part of lost work earnings.
both I and II
Insurance Cash Values grow tax-deferred
true
what are the four common methods for paying for long-term care services?
medicare medicaid personal assets and savings long-term care insurance
What are instrumental activities of daily living?
medicine management shopping preparing meals hosuekeeping doing laundry using transportation handling finances
A 1035 policy exchange is a non-taxable event
true
A Life Insurance Policy with a LTC rider is an option instead of a standalone policy
true
A good time to use decreasing term is when you have a mortgage
true
A person could look to Medicaid for LTC expenses if they could qualify
true
A special needs trust will provide benefits to persons or beneficiaries with special needs
true
As individuals age, their mortality risk (the risk that they will die within the year) increases
true
Buy-Sell agreements allow for the orderly arrangement of the sale and purchase of closely-held business interests by the owners or partners
true
Companies usually put surrender charges in place to prevent policy owners from purchasing a policy, filing a claim, then canceling the policy.
true
