Life & Health Insurance - Test Exam
A fully insured retired worker is entitled to full Social Security disability benefits. This equals 100% of which of thefollowing? MFB PIA AIME AMW
B
A producer need NOT maintain a separate premium account if funds received are remitted to principals or insuredswithin: 30 business days. 5 business days. 3 business days. 10 business days.
B
A qualifying event covers all of the following EXCEPT Reduction in work hours for the covered employee Medicaid eligibility for the covered employee Divorce of the covered employee from the covered employee's spouse Bankruptcy of the employer
B
A stop-loss feature in a major medical policy specifies the maximum benefit amount the policy provides in a lifetime amount the insured must pay toward covered expenses amount the insured must pay in premiums benefit amount the policy provides each year
B
All of the following are illegal inducements EXCEPT: offering a valuable consideration not specified in the contract. reducing the premium rate for large policies. rebating part of the premium. making a special offer for payment of dividends
B
An example of an illiquid asset is bank savings accounts real estate checking accounts life insurance proceeds
B
Basic hospital expense insurance subjected the insured to which of the following? coinsurance low limits maximum out-of-pocket limits deductibles
B
Benefits paid for customary charges incurred during an examination by an ophthalmologist or optometrist are includedin basic physician's expense insurance vision care insurance disability income insurance surgical expense insurance
B
Excepted benefits are not included as minimum essential coverage. Which of the following is NOT an exceptedbenefit? Accident-only insurance Medicare Disability income insurance Workers' compensation insurance
B
Filing a fraudulent health insurance claim is an example of a physical hazard a moral hazard a peril a morale hazard
B
If an employer group plan is contributory, most states require that at least A- 65% of the eligible employees participate B- 75% of the eligible employees participate C- 50% of the eligible employees participate D- 85% of the eligible employees participate
B
In Maryland, the free-look provision for all health insurance policies is: 20 days from the date the policy is delivered. 10 days from the date the policy is delivered. 7 days from the date the policy is delivered. 5 days from the date the policy is delivered.
B
KAC Health Insurance Company insures a risk without being notified that the insured already has existing coverage forthe same risk. The policy that KAC issued contains the insurance with other insurers provision. When a loss occurs, thetotal coverage that the insured had purchased (including the coverage that KAC was unaware of at the time ofapplication) would pay $5,000. Had KAC been the only insurer, it would have paid $2,500. What amount is KAC liableto pay? $0 $1,250 $1,750 $2,500
B
Louise applied for a $40,000 life insurance policy, paid the initial premium, and received a conditional receipt. Which ofthe following statements is NOT correct? If Louise died of a heart attack 1 day after completing the medical exam, whichfulfilled her requirements, the insurer would continue to underwrite the policy as ifshe were still alive. If Louise died of a heart attack 1 day before taking the required medicalexam, the insurer would still pay the beneficiary the coverage amountstated in the application. If Louise died from an accidental fall a few days before her required medicalexam, the insurer would return the full premium that was paid with the applicationwith no coverage ever having gone into effect. If Louise completed her requirements by taking the required medical exam, butdied 4 days later from an accidental fall, the insurer would still pay the beneficiarythe coverage amount as long as the policy was issued as originally applied for.
B
Related costs associated with a surgical expense policy do NOT include assistant surgeon room and board surgeons' fees operating room
B
Underwriting for group health plans requires a lengthy probationary period during which no benefits will be provided no medical examination a medical examination on each insured a credit report on each insured
B
What is the basic source of information for life insurance underwriting and policy issue? Consumer reports The application The Medical Information Bureau Physician reports
B
When a variable annuity is purchased, who is responsible for the investment risk? The beneficiary The owner The participant The insurer
B
When marketing long-term care insurance, the insurer or agent must consider possible referral business the suitability of the purchase if the insured is likable the commission amount
B
Which of the following is considered a long-term care insurance policy? A policy to supplement Medicare coverage. An individual policy designed to provide coverage for at least 24consecutive months for services provided in a setting other than the acutecare unit of a hospital. An accident-only policy targeted towards senior citizens. A group policy designed to provide coverage for between six months and twoyears in an acute care unit of a hospital.
B
Which of the following is the best example of the insurance with another insurer provision? The insured has a major medical policy and a hospital income policy withcompany A. The insured was in the hospital for five days. Both policies wouldpay applicable benefits in full. The insured has a hospital income policy with company A with a $100 dailybenefit, and a hospital income policy with company B with a $200 dailybenefit. Company A would pay one third of the loss, subject to its policylimit. The insured's medical expense policy lapsed. However, the insured had acovered claim during grace period. The insurer must pay this claim. The insured has a major medical policy and a disability income policy with adifferent insurer, the two policies would coordinate benefits.
B
Which of the following life insurance policies with the same face value would have the highest premium if issued to thesame person? 10-year renewable level term 10-year renewable and convertible level term 10-year nonrenewable level term 10-year decreasing term
B
Which of the following policies endows at age 100? Any endowment policy Whole life and limited-pay life Level term and whole life Endowment and decreasing term
B
Which of the following requires the insured to have a high-deductible health plan? An HMO A PPO A POS plan An HSA
B
Which of the following statements regarding Social Security disability is NOT true? The total family benefit is capped by a family maximum benefit amount based onthe worker's average earnings. Benefits are based on the U.S. average monthly income, indexed for inflation. A spouse caring for the disabled worker's unmarried child under age 16 ordisabled before age 22 receives a benefit equal to 50% of the worker's PIA. A disabled worker receives benefits equal to her primary insurance amount.
B
Which of the following statements regarding deferred annuities is NOT correct? The owner is not required to annuitize the contract. They generally permit contract owners to withdraw a specified percentageannually, tax-free and without a surrender charge. They may be funded with a single premium payment or with periodic premiumpayments. They typically have a surrender charge that is assessed with contract surrenderduring the first 2 to 12 years or more. Typically up to 10% of the contract valuecan be withdrawn free of surrender charge in any 1 year.
B
Which of the following types of annuity payout options guarantees, as a minimum, the payout of the entire annuityprincipal amount? Joint and full survivor option Cash refund Pure life Period certain
B
Which of the following types of care is described as a broad range of medical, personal, and environmental servicesdesigned to assist individuals who have lost their ability to remain completely independent in the community? Specified care Long-term care In-house care Chronic care
B
Which of the following uses life insurance death benefits to provide financial support for dependents when the primarywage earner dies? Estate creation Survivor protection Investments Estate conservation
B
With interest-sensitive whole life insurance, the cash value is based on the interest rate stated in the policy the cash value fluctuates in accordance with interest rates the policy always pays a dividend the interest rate is guaranteed by the insurer
B
Workers' compensation benefits cover all of the following EXCEPT medical treatment relocation loss of income due to disability or death rehabilitation
B
A guaranteed insurability rider may be attached to which of the following policies? Accidental death and dismemberment Group health Disability income Medical expense
C
A policy's grace period is usually no more than 45 days 10 days 31 days 60 days
C
After a family's breadwinner dies, the blackout period generally can be defined as the period during which children only receive Social Security benefits that begins when the surviving parent retires that begins when the youngest child turns 16 and ends when the survivingparent reaches age 60 during which minor children are living at home
C
All of the following factors are usually considered cash needs when determining the life insurance needs of a familyEXCEPT last illness and funeral costs children's education costs funds to support spousal retirement outstanding debts
C
All of the following titles refer to the Affordable Care Act (ACA) EXCEPT Obamacare Health Care Reform Patient Assistance Act Patient Protection and Affordable Care Act
C
An agent that represents only 1 insurance company is a general agent a special agent a captive agent a broker
C
At the age of 34, Ben purchased a whole life policy with a guaranteed insurability option. How many opportunities willhe have to purchase additional life insurance in the future? 4 5 2 3
C
Changes made to a policy must be approved in writing by the insured and initialed by the agent. approved in writing by the insured, agent and executive officer of the insurancecompany. approved in writing by an executive officer of the insurance company. approved in writing by the insured and initialed by one of the insurer'sexecutive officers.
C
Choua applied for a $100,000 whole life policy but did not pay the initial premium at the time of application. When theagent later delivers the policy, the agent must collect the premium and obtain which of the following statements fromChoua? A statement of insurability A statement of continued representations and warranties A statement of good health A statement of no material change in risks
C
Decreasing term insurance could be recommended for all of the following EXCEPT for protection while a business loan is outstanding for mortgage protection to build a retirement fund to protect a family while children are growing up
C
Fred, age 60, has 3 years until he retires. He decides to surrender his whole life insurance policy and use the cashvalue to fund a single premium annuity. How many payments will he make to fund the annuity? 7 As many as he wishes 1 3
C
Hector's spouse was the primary beneficiary of his $250,000 life insurance policy. She received payments ofapproximately $700 a month as long as she lived and, at her death, their 2 children received lump-sum payments of$125,000 each. What settlement option was in effect on Hector's policy? Period certain option Life income option Interest-only option Installment refund option
C
If a medical report is required on an applicant, it is completed by a home office underwriter the home office medical director a paramedic or examining physician the agent
C
Jay has a $50,000 life insurance policy with an accidental death benefit that pays triple the face amount. If Jay commitssuicide 3 years after purchasing the policy, how much will his beneficiary receive? $0 $100,000 $50,000 $150,000
C
Juan owns a 5-year $50,000 term life insurance policy, and Maria owns a $50,000 whole life insurance policy. Which ofthe following statements is CORRECT? Maria's policy, but not Juan's, may have an option to renew. Juan and Maria will receive the cash surrender value if they cancel their policies. Juan's policy, but not Maria's, may have an option to convert. Both policies provide living benefits to the policyowners while alive.
C
Lee has a Social Security PIA of $800 at the time of his death. How much is payable to his surviving spouse, who iscaring for an unmarried child under the age of 16? $640 $160 $400 $800
C
Long-term care insurance policies are designed to provide benefits for at least how many months? 18 months. 12 months. 24 months. 6 months.
C
Marco's medical expense policy states that it will pay a flat $75 per day for room and board for each day ofhospitalization. The policy pays benefits on which basis? Reimbursement Invoice Indemnity Service
C
Mary, age 70, recently purchased a nonqualified immediate annuity to supplement her retirement income, and throughit will receive a lifetime income of $800 per month. Which of the following statements most correctly describes how thisincome will be taxed? Mary will pay income tax each year on just a portion of the payments received,and when she has fully recovered her basis, all future payments will not be taxed. Mary will not pay income tax until the sum of payments received equals herbasis, at which point all future payments will be fully taxable. Mary will pay income tax each year on just a portion of the paymentsreceived, and when she has fully recovered her basis, all future paymentswill be taxable. Mary will pay income tax on the full amount received each year until the sum ofpayments equals the amount she paid for the annuity (her basis), at which pointall future payments will not be taxed.
C
One of the first changes in health care due to the ACA was providing dependent coverage until a child's 18th birthday 25th birthday 26th birthday 21st birthday
C
Penalties for violating the Fair Credit Reporting Act include fines up to $12,000 imprisonment for 3 years fines, actual damages suffered by the consumer, punitive damages, andreasonable attorney's fees fines up to $10,000
C
Taxpayers are able to withdraw IRA funds without penalty for all of the following reasons EXCEPT buying a first home (up to $10,000) education costs, including room and board travel necessitated by medical reasons costs associated with the owner's disability
C
The calendar year deductible provision of a major medical policy stipulates that all claims submitted during the calendar year are subject to the amount of thedeductible the insurer pays a higher percentage of the medical expenses than the insured the deductible is applied only once during the calendar year the deductible is applied against each claim during the first calendar year thepolicy is in effect
C
Upon the issuance of a life insurance policy, an insurable interest must exist between the insured and the beneficiary the agent and the applicant the applicant and the insured the applicant and the beneficiary
C
What settlement option is designed to pay out a specified amount of income at regular intervals over an unspecifiedperiod of time? Interest-only option Life income option Fixed-amount option Fixed-period option
C
When a cash value life insurance policy is converted into an annuity in a nontaxable transaction, the event is generallyknown as a modified endowment a rollover a 1035 exchange a pension enhancement
C
When does a surviving family have the greatest need for income? After the children are independent During the final illness of the death of the breadwinner While the children are growing up During the surviving spouse's old age
C
When is a person convicted of insurance fraud in Maryland guilty of a felony? When the act of fraud caused the victim to lose over $1,000. When the insurer the perpetrator represents was a party to the fraudulent act. When the act of fraud has a value of $300 or more. When the insurer the perpetrator represents was not a party to the fraudulent act.
C
Which of the following individuals can access the cash value of her life insurance policy to provide extra retirementincome? Judith, who is covered by a $500,000 key-person life insurance policy Mai, who owns a $200,000 decreasing term policy Harriet, who owns a $100,000 single premium whole life policy Rosa, who owns a $50,000 25-year level term policy
C
Which of the following is NOT a standard life insurance policy nonforfeiture option? Extended term insurance option Reduced paid-up (permanent) insurance option 1-year term insurance option Cash surrender option
C
Which of the following statements about Medicare supplement insurance is CORRECT? It generally duplicates many of the benefits provided by Medicare. It can provide benefits for losses resulting from sickness on a different basis thanlosses resulting from accidents. It cannot be cancelled for any reason other than nonpayment of premiumsor as authorized by the Commissioner. It can only be sold by agents who are licensed specialists for senior citizens.
C
Which of the following statements about preferred provider organizations is NOT correct? They operate on a fee-for-service basis. They offer health care services to their members at discounted rates that arenegotiated in advance. They offer health care coverage to low-income individuals. Physicians who are part of a PPO are in private practice.
C
Which of the following statements regarding a deferred compensation plan is CORRECT? The employer purchases a whole life insurance policy, the cash value ofwhich the employee can access only while working for the employer. The employee uses part of his current income to purchase a whole life insurancepolicy, the cash value of which can be accessed only while he is employed by hiscurrent employer. The employee agrees to forgo part of his current income until a specified futuredate, typically retirement, and may use life insurance as the funding vehicle forthe plan. The employer purchases a whole life insurance policy on key employees andreceives the death benefits if the employee dies before retirement.
C
Which of the following statements regarding the grace period for life insurance is NOT correct? It can vary according to the particular policy. It begins the date the premium is due. It is usually shorter than 30 days. The overdue premium plus interest (if there is a loan) may be deducted from anydeath claim that occurs during the grace period.
C
Which of the following statements regarding the medical reimbursement benefit available in some individual disabilityincome policies is CORRECT? The benefit is only paid if the insured is still able to continue working. The benefit is paid for a disabling illness. The benefit is a percentage of the monthly income benefit. The benefit is paid in addition to other benefits under the policy.
C
An insurance producer must be appointed by: the policyholder. the state of Maryland. the broker. the insurer.
D
Arthur incurs total hospital expenses of $8,300. His major medical policy includes a $500 deductible and an 80%/20%coinsurance feature. If this is the first covered expense he has incurred this year, how much will Arthur have to paytoward his hospital bill? $1,800 $2,160 $5,900 $2,060
D
Bill names his church as the beneficiary of his $300,000 life insurance policy. When Bill dies, who is responsible for theincome taxes payable on the lump-sum proceeds received by the church? Bill's estate Bill's estate and Bill's church split the tax Bill's church No income tax is payable on the death proceeds
D
Blanket health insurance is a type of individual accident insurance individual health and life insurance group health and life insurance group accident insurance
D
Debbie is concerned that her health insurance coverage is inadequate. Which of the following is the best reason for herto purchase an indemnity-type medical expense policy? It will pay the difference between what her other insurance covers and heractual expenses. It will pay all or part of her deductible. It will pay a percentage of her coinsurance. It will pay a specified per-day benefit.
D
Exclusions for pre-existing conditions help to avoid more complicated underwriting procedures insuring persons who are accident prone claims for long hospital confinements adverse selection against an insurer
D
Health reimbursement accounts are established by employers who provide covered employees with high-deductiblehealth plans. The employer makes tax-deductible contributions, which employees can use for all of the followingpurposes EXCEPT to apply co-payments to pay deductibles to pay coinsurance to create tax-deferred savings accounts
D
In addition to the Buyer's Guide, what must be delivered to an applicant or insured either with or before the delivery of alife insurance policy? A copy of the signed application A statement regarding dividends A copy of the company annual report The outline of coverage
D
Leonard owns a major medical health policy that requires him to pay the first $200 of covered expenses each yearbefore the policy pays its benefits. The $200 is the policy's stop-loss amount coinsurance amount annual premium deductible
D
Major medical policies may include any of the following types of deductibles EXCEPT individual family corridor decreasing
D
Maria is a new full-time employee who has just completed her probationary period with her employer. She is marriedwith three children. Which of the following persons are NOT eligible to participate in her group plan? Her husband Fernando Her 24 year old daughter Tina who just got married Her 29 year old disabled son Martin Her 26 year old son Juan
D
Of the following, which is a situation that could result in the conditional receipt becoming void? The applicant dies before the policy is issued. The applicant's policy is issued as applied for. The applicant dies after the policy is issued. The applicant is found to be a substandard risk.
D
Sarah owns a life insurance policy with a $50,000 face amount and a 10-year return-of-premium rider. She pays anannual premium of $700. If she were to die 6 years after purchasing the policy, what would be the total amount payableto the beneficiary? $50,000 $50,700 $57,000 $54,200
D
The period of time a new employee has to wait before she may enroll in a group life insurance plan is called an elimination period an enrollment period a discrimination period a probationary period
D
Under COBRA regulations, which of the following statements regarding coverage of a spouse after divorce from aninsured employee is CORRECT? All coverage ends at the time of the divorce. The ex-spouse's coverage can be converted to an individual policy. The ex-spouse's coverage can be continued with an increase in coinsurance anddeductible. The ex-spouse's coverage can be continued with identical benefits for aspecified period.
D
Under an executive bonus plan, the amount of premiums paid is not taxed and treated as deferred income taxable to the business and the employee taxed as a corporate business expense taxable income for the employee
D
What happens if the insurer discovers that the insured's age was accidentally misstated on an application for anindividual life insurance policy? The insured must pay a $5,000 fine. The policy will be canceled. Benefits are paid as if the misstated age is the insured's real age. Benefits will be calculated according to how much coverage the premiumpaid would have purchased for the correct age.
D
What happens if, when paying benefits, the insurer discovers that a person's age had been misstated on the individuallife insurance application? Benefits will be paid as if the incorrect age stated were actually the correct age. No benefits will be paid. The policyholder's estate must pay a fine before benefits are paid. Benefits will be paid for the amount of coverage the premium would havepurchased at the correct age.
D
What is the maximum number of days of skilled nursing facility care for which Medicare will pay benefits? 60 days 25 days 75 days 100 days
D
What tool do life insurance actuaries use to help establish premium rates based on the probabilities of death at variousages? Annuity table Survivor table Morbidity table Mortality table
D
Which of the following people will NOT be granted a temporary producer's license? The surviving spouse of a deceased producer. The executor of a deceased producer's estate. An applicant for a producer license who intends to take the exam within 90 days. An instructor of an insurance continuing education course.
D
Which of the following phrases best describes an authorized insurer? A producer who is authorized by the Commissioner to transact business inMaryland. A policyholder who has a legal contract with an insurance company. A producer who has the authority to represent an insurance company. A company that is authorized by the Commissioner to transact insurancebusiness in Maryland.
D
Which of the following required provisions is INCORRECT? Medigap policies must be at least guaranteed renewable. Pre-existing conditions limitations may not last longer than six months from thedate of issue. Medigap policies may not duplicate benefits provided by Medicare. Medicare supplement policies must have a 10-day free look period.
D
Which of the following situations is the best example of unfair discrimination? An insurer refuses to issue a policy to an applicant whose credit history suggestsan inability to financially support the policy being applied for. An insurer assigns a premium rating to an applicant who weighs 30 pounds morethan a typical person of that age and sex. An insurer refuses to issue a policy to an applicant who has been treated for drugdependency on 2 separate occasions in the previous 5 years. An insurer assigns a premium rating to an applicant because of studiesthat suggest members of the applicant's race have a shorter than averagelife expectancy.
D
Which of the following statements about group life insurance is NOT correct? With debtor groups, the amount of insurance on the life of any debtor cannotexceed the amount owed by the debtor to the creditor. A debtor group policy may be issued only if the group is receiving new entrants ata rate of 100 per year or is expected to achieve 100 new entrants by the end ofthe first policy year. Labor union groups, employee groups, and professional groups can be coveredunder group life insurance policies. Insured members of professional association groups must select theamount of insurance they want issued.
D
Which of the following statements is CORRECT? Medical expense insurance provides periodic payments to the insured when he isunable to work due to sickness or an injury. Long-term care insurance provides benefits to the insured for hospital careimmediately following a surgical procedure. Disability income insurance reimburses the insured for medical care, hospitalcare, and related services for disabled insureds. Hospital and medical expense coverage helps pay doctor and hospital bills.
D
Which of the following statements regarding mass marketing insurance is CORRECT? It involves one-on-one meetings between prospects and agents. It takes advantage of small group situations. It is considered unethical and is illegal in some states. It is marketed through various forms of print, visual, and aural media.
D
Which of the following statements regarding the tax treatment of distributions from an individually owned, nonqualified,deferred annuity is NOT correct? An owner of a deferred annuity who annuitizes the contract will receive the basistax-free. If the contract owner is younger than age 59½, a partial surrender may besubject to a 10% penalty in addition to ordinary income taxation. If the contract owner makes a partial surrender, the amount withdrawn is treatedfirst as a taxable distribution of gain (LIFO). If the distribution is the result of the annuity contract owner's death, thecash value payable to the beneficiary is income tax-free.
D
Who enforces all laws that relate to insurance in Maryland? The governor. The federal insurance association. Insurance producers. The Insurance Commissioner.
D
A flexible spending account (FSA) is a qualified employee benefit plan and approved withdrawals are not taxed requires employees to establish a high-deductible health plan (HDHP) allows funds to roll over from year to year is funded by employer contributions to pay for approved health care costs
A
A long-term care policy will cover all of the following EXCEPT emergency hospital care custodial care home health care nursing care
A
All individual life insurance policies issued in Maryland must include all of the following provisions EXCEPT: conversion. entire contract. grace period. reinstatement.
A
All of the following are basic factors used to compute life insurance premiums EXCEPT a morbidity factor that covers the risk of becoming disabled and triggeringthe waiver of premium provision an interest factor that offsets part of the mortality and expense charges a mortality factor that covers the risk of dying prematurely an expense factor that covers the cost of issuing and maintaining the policy
A
All of the following reforms began in 2010 under the Affordable Care Act EXCEPT pre-existing coverage for all insureds, regardless of age pre-existing coverage for children under age 19 no lifetime limits on essential services dependent coverage until age 26
A
An insurance producer acts in what capacity when holding insurance premiums? Fiduciary Official Representative Legal
A
An insurer or producer soliciting long-term care coverage must do which of the following? Deliver an outline of coverage to prospective applicants at the time of theinitial solicitation. Deliver a Notice Regarding Replacement to the existing insurer. Deliver a Medicare supplement Buyer's Guide no later than when the policy isdelivered. Provide a health insurance disclosure sheet when the policy is delivered.
A
Any attempt by an existing insurer or its producer to dissuade a policyholder from replacing an existing insurance policyis known as: conservation. coercion. duress. dissuasion.
A
Before a producer can sell insurance in Maryland, he or she must do all of the following EXCEPT: earn a college degree. pay the appropriate fees. hold a license for the lines of insurance he or she intends to sell. be appointed by at least one insurer.
A
Betty owns a universal life insurance policy that was issued with a $100,000 face amount and now has total deathbenefit protection of $110,000. Several months ago she borrowed $15,000 from the policy. The outstanding loanbalance (including interest) is $15,200. If Betty dies today, what will be the amount of the death benefit? $94,800 $110,000 $100,000 $95,000
A
Frank owns and is insured by a participating whole life insurance policy with a death benefit of $85,000, including$35,000 of paid-up additions to the face amount. His basis in the policy is $30,000. The beneficiaries are his daughterand son, equally. If he were to die today, what amount of this policy would be valued in Frank's estate? $85,000 $55,000 $0 $50,000
A
Heather wants her $85,000 life insurance policy arranged to pay her spouse a monthly income if she dies first, but mostor all of the proceeds to go to their 2 children after her spouse's death. Which of the following settlement options couldHeather select to provide income for her spouse and conserve the proceeds for the children? Interest-only option Fixed-period option Fixed-amount option Life income option
A
In most states, all of the following are optional provisions in an accident and health insurance contract EXCEPT a reinstatement provision an unpaid premium provision a change of occupation provision a misstatement of age provision
A
Kelly, age 48, owns a universal life insurance policy (non-MEC) with a current death benefit of $270,000 and a cashvalue of $20,000. Her basis in the policy is $12,000. Kelly is interested in either borrowing or withdrawing $15,000 fromthis policy. What would be the tax consequences if she were to borrow the $15,000 through a policy loan? There would be no income taxation on any portion of the amount borrowed,whether or not she repaid the policy loan. There would be no income taxation on any portion of the amount borrowed, but ifshe did not repay the loan, $3,000 would be subject to income taxation. Of the amount borrowed, $12,000 would be income tax-free, $3,000 would besubject to income taxation, and there would be an additional penalty tax. Of the amount borrowed, $12,000 would be income tax-free and $3,000 wouldbe subject to income taxation.
A
Licensed and appointed agents represent the insurer the applicant or insured the state insurance department the National Association of Insurance Commissioners
A
Life insurance policies must include a provision entitling policyholders to a grace period for payment of premium, duringwhich time the death benefit coverage continues in force. How long must this grace period be? 30 days or one month. 90 days. 1 year. 7 days or one week.
A
Major medical policies that pay 100% of covered expenses above a specified amount and after the insured's deductiblecontain what kind of a provision? Stop-loss Umbrella Blue sky Maximum benefit
A
Malik works as a dentist and mountain climbs, skis, and flies airplanes in his spare time. When he applies for a lifeinsurance policy, the agent's and Malik's signatures will be required on all of the following documents EXCEPT the report issued by the Medical Information Bureau a form authorizing the insurer to obtain investigative consumer reports andmedical information the application a questionnaire regarding Malik's aviation activities
A
Monica is covered under Medicare Part A. She spends 9 days in the hospital for back surgery and is released onAugust 22nd. It was the first time she ever had to stay overnight in the hospital. When the bill arrives, she pays herdeductible, and Medicare pays the balance. She is admitted to the hospital again on November 14th of that same yearfor additional surgery. Which of the following statements is CORRECT? It will be considered the start of a new benefit period. She will not have to pay the Part A deductible again. She will have to pay the Part A deductible again only if the second surgeryis unrelated to the first surgery. She need not pay the Part A deductible, but she must make a daily co-payment.
A
Premiums paid into a variable annuity, after deduction for expenses, are applied regularly to purchase: accumulation units variable units stock units annuity units
A
The developer of the standard form of the Medicare Buyer's Guide is: the National Association of Insurance Commissioners and the Centers forMedicare and Medicaid Services. the Department of Labor. the Social Security Administration. the Maryland Insurance Department.
A
The party to whom the life insurance policy cash values belong is the policyowner the beneficiary the insurer the insured
A
The purpose of a health savings account is to serve as a tax-favored way to accumulate funds to cover medical expenses shield assets for the purpose of qualifying for Medicaid provide funds to pay for the health care of dependents save for retirement
A
When must health insurance policies that provide family coverage start covering adopted children? From the date of adoption. six months after the date of adoption. Health insurance policies are not required to cover adopted children. From the date the child begins to live in the family's home.
A
Which of the following acts of legislation requires fair and accurate reporting of a consumer's buying and bill-payinghistory? Fair Credit Reporting Act McCarran-Ferguson Act Unfair Trade Practices Act Employee Retirement Income Security Act
A
Which of the following dental plans covers dental services on a traditional fee-for-service basis? Comprehensive plan Preferred provider organization Direct reimbursement plan Capitation plan
A
Which of the following is a mandatory minimum benefit for Medicare supplement policies? Coverage of Medicare Part A-eligible hospital expenses to the extent notcovered by Medicare from the 61st through the 90th day in any Medicarebenefit period A $1,000 death benefit Coverage of the 30% coinsurance amount under Medicare Part B, subject to acalendar year deductible of $100 Supplemental coverage for 80% of all eligible hospital expenses not covered byMedicare
A
Which of the following is the best reason to purchase a vision care policy? A- To supplement existing major medical coverage B- To help pay the cost of medically necessary eye surgery C- To obtain coverage that will pay 100% of routine vision care D- To obtain coverage that will pay for corrective surgery
A
Which of the following people do NOT need to be licensed to transact insurance business in Maryland? Client service representatives. Life insurance producers who hold their Chartered Life Underwriter designation. Producers who specialize in annuities. Producers who do not work for 1 particular insurance company
A
Which of the following provisions is optional in an individual health insurance policy? Unpaid premium Entire contract Change of beneficiary Grace period
A
Which of the following statements about accelerated benefit provisions is NOT correct? The insured must be expected to die within 6 months. They are standard in life insurance policies. The death benefit, less the accelerated payment, is still payable. They provide for the early payment of part of a policy's face amount if the insuredsuffers from a terminal illness or injury.
A
Which of the following statements regarding buy-sell agreements is NOT correct? Buy-sell agreements are only funded with annuities. The death benefit is the purchase price of the business interest. The buyer of the business is the beneficiary. Buy-sell agreements may be funded with life insurance.
A
Which of the following statements regarding deferred compensation plans is NOT correct? The employee may convert the funds to another plan if he leaves the company. The funds are taxable at retirement. The business pays the premiums on a life insurance policy owned by theemployer. The death benefit proceeds from the plan are paid to the employee's beneficiary.
A
Which of the following statements regarding the estate tax treatment of life insurance owned by the insured at theinsured's death is NOT correct? Life insurance that is owned by the insured will avoid estate tax inclusionas long as ownership is transferred to another party at least 1 year beforethe insured's death. An irrevocable life insurance trust is a common device used to keep lifeinsurance out of the insured's estate. Life insurance death benefit proceeds are included in the insured's estate forestate valuation purposes if the policy was owned by the decedent. The insured could keep death benefit proceeds out of his estate by makinganother party the owner of the policy.
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Who, besides the state, regulates the sale of variable life insurance and variable annuities? The Federal Trade Commission (FTC) The Federal Communications Commission (FCC) The Securities and Exchange Commission (SEC) The National Association of Insurance Commissioners (NAIC)
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