Life Insurance Exam FM Washington State

life insurance death proceeds are a) taxed as ordinary income b) generally not taxed as income c) taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income

b) generally not taxed as income

which of the following would be the beneficiary in credit life insurance? a) insured b) company c) creditor

c) creditor

a health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as a) major medical b) AD&D c) medical expense d) critical illness

d) critical illness a critical illness policy covers multiple illnesses, such as heart attack, stroke, renal failure, and pays a lump-sum benefit to the insured upon the diagnosis (and survival) of any of the illnesses covered by the policy

which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a) concealment b) indemnity c) representation d) warranty

d) warranty a warranty in insurance is a statement guaranteed to be true. when an applicant is applying for an insurance contract, the statements they makes generally not warranties but representations (true to the best of the applicant's knowledge)

For group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense?

100%

HIPAA applies to groups of

2 or more

what is the elimination period for social security disability benefits?

5 months

in order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

5 years

Where would Long-term care services be rendered?

A nursing home or one's own home

What is the goal of the HMO? A) Limiting the deductible and coinsurance to reduce costs B) Providing health services close to home C) Early detection through regular checkups D) Providing free health services

C) Early detection through regular checkups the goal of the HMO is early detection so members are encouraged to participate in regular check-ups. in this way the HMO hopes to catch disease in its earliest stages when treatment has the greatest chance for success

If a licensee whose license has been temporarily suspended demands a hearing, the commissioner must hold the hearing demanded as according to all the following statements except a) within 30 days of the license effective date b) within 30 days after receipt of the demand c) within 30 days of the effective date of a temporary license suspension issued after such demand d) unless postponed by mutual consent

a) within 30 days of the license effective date if a licensee whose license has been temporarily suspended demands a hearing, the commissioner must hold the hearing demanded within 30 days after receipt of the demand or within 30 days of the effective date of a temporary license suspension issued after such demand, unless postponed by mutual consent

When an annuity is written, whose life expectancy is taken into account?

annuitant

In an annuity, the accumulated money is converted into a stream of income during which time period?

annuitization period

what is the basic source of information used by the company in the risk selection process?

application

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

authorized

a life insurance policy was issued with a face amount of $100,000. the policy's cash value is $50,000. if the insurer becomes insolvent, and the ben submits a death benefit claim, what will the insurance Guaranty Association pay to the policy claimant? a) $50,000 b) $100,000 c) $150,000 d) $500,000

b) $100,000 the benefits that the Association may become obligated to cover cannot exceed the lesser of the amount of the insurer would have been liable for if it had not become impaired, or $500,000

In order to collect Social Security disability benefits, the claimant must be able to demonstrate that the disability will last at least a) for life b) 12 months c) 24 months d) until age 65

b) 12 months

the minimum number of credits required for partially insured status for social security disability benefits is a) 4 credits b) 6 credits c) 10 credits

b) 6 credits to be considered partially insured, an individual must have earned 6 credits during the last 13-quarter period

what is the maximum penalty for habitual noncompliance with the Fair Credit Reporting Act? a) $100 per violation b) revocation of license c) $2,500 d) $1,000

c) $2,500

every licensed person in this state must reply to an inquiry by the commissioner regarding the business of insurance within what time period? a) immediately b) 3 business days c) 15 business days d) 48 hours

c) 15 business days

within how many days after receiving proof of death are group life insurers required to pay the policy proceeds to the beneficiary? a) 10 days b) 15 days c) 30 days d) 60 days

c) 30 days

the document that indicates that an insurer has been approved and is authorized to transact insurance in a particular state in known as

certificate of authority

An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin? a) 5 b) 3 c) 2 d) 1

d) 1 the additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what social security would pay. after a year, the insurer ends the benefit and assumes that social security will begin payment

according to the state regulations pertaining to claims settlements, after receiving a notification of claim from an individual PO, the insurer must acknowledge that notice within a) 3 working days b) 30 working days c) 30 calendar days d) 10 working days

d) 10 working days or 15 working days for claims under group contracts

How many eligible employees must be included in a contributory plan? a) 90% b) 100% c) 50% d) 75%

d) 75%

all of the following benefits are available under social security EXCEPT a) old-age and retirement benefits b) disability benefits c) death benefits d) welfare benefits

d) welfare benefits social security is an entitlement program, not a welfare program

which type of insurance provides funds for a business organization to purchase the business interest of a disabled partner?

disability buy-sell the premiums are not deductible, but the benefits are received income tax-free

a producer agent must do all of the following when delivering a new policy to the insured EXCEPT:

disclose commissions earned from the sale of the policy a producer must explain policy provisions, exclusions, and riders at the time of delivery, as well as the rating procedures, especially if the policy is rated differently than applied for. the producer must also collect any due premium and have the insured sign the statement of continued good health 1. policy provisions 2. exclusions 3. riders on the policy 4. collect first premium 5. signed application

how often must an authorized insurer be examined?

every 5 years

an insurance has medical insurance coverage through 2 different providers, both covering the same expenses on an expense-incurred basis. neither company knows in advance that the insured as coverage with other insurers. the insured submits a claim to both insurers. how should the claim be handled?

each insurer should pay a proportionate share of the claim

which of the following terms best describes the coverage provided by term policies, as compared to any other form of protection? a) greatest b) least c) most comprehensive d) longest

greatest term policies provide for the greatest amount of coverage for the lowest premium, as compared to any other form of protection

When would a misrepresentation on an insurance application be considered fraud?

if it is intentional and material

all advertisements are the responsibility of the ______

insurer

all of the following statements are true regarding group insurance EXCEPT: a) small groups b) participants in the policy each receive a policy c) group sponsor is the policyholder

participants in the policy each receive a policy

based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?

predicted needs of the family after the insured's death HLVA to determining the value of an individual's life requires the calculation of probable future earnings of the insured, which involves: 1. wages 2. expenses 3. inflation 4. amount of time until retirement 5. the time value of money

which of the following best defines target premium in a universal life policy? a) corridor insurance b) recommended amount to keep the policy in force throughout its lifetime c) maximum amount policyowner may pay on a policy

recommended amount to keep the policy in force throughout its lifetime

For the purpose of insurance, risk is defined as

the uncertainty or chance of loss

The term "producer" refers to any person appointed by an insurer to

solicit applications for insurance on its behalf

which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?

stock only stock insurance companies are owned and controlled by stockholders

in a survivorship life policy, when does the insurer pay the death benefit?

upon the last death

which of the following is NOT a goal of risk retention? a) to fund losses that cannot be insured b) to minimize the insureds level of liability in the event of loss c) to reduce expenses and improve cash flow d) to increase control of claim reserving and claims settlements

b) to minimize the insureds level of liability in the event of loss retention usually results from 3 basic desires of the insured: 1. reduce expenses and improve cash flow 2. to increase control of claim reserving and claims settlements 3. to fund losses that cannot be insured

Death benefits payable to a beneficiary under a life insurance policy are generally a) exempt from income taxation if under $10,000 b) exempt from income taxation if over $10,000 c) not subject to income taxation by the Fed Gov d) subject to income taxation by the Fed Gov

c) not subject to income taxation by the Fed Gov when premiums are paid with after tax dollars, the death benefit is generally not ""

In case of a loss, the indemnity provision in insurance policies a) pays the insured a percentage of the loss above and beyond the loss b) pays the insured as much as 95% of the loss c) restores an insured person to the same financial state as before the loss d) allows the insured to collect 20% more than the actual loss

c) restores an insured person to the same financial state as before the loss Indemnity/reimbursement is a provision in an insurance policy that states that in the event of loss, an insured or a beneficiary is permitted to collect only to the extent of the fin loss, and is not allowed to gain fin bc of the existence of an insurance contract Indemnification is an agreement where your insurer helps cover loss, damage or liability incurred from a covered event. Indemnity is another way of saying your insurer pays for a loss, so you don't have financial damages.

annuities can be used to fund which of the following? a) group life insurance b) estate creation c) retirement plans

c) retirement plans since annuities are a popular means to provide retirement income, they are often used to fund qualified retirement plans

which of the following is TRUE for both equity indexed annuities and fixed annuities? a) both are considered to be more risky than variable annuities b) they invest on a conservation basis c) they have a guaranteed minimum interest rate d) they are both tied to an equity index

c) they have a guaranteed minimum interest rate while equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate

when would a 20-pay whole life policy endow? a) after 20 payments b) in 20 years c) when the insured reaches age 100 d) at the insured's age 65

c) when the insured reaches age 100 a limited-pay whole life policy, just like straight life, endows for the face amount if the insured lives to age 100. The premium is, however, completely paid off in 20 years. Limited pay life insurance is for an individual who owns a whole life insurance policy but chooses to pay for the total cost of their premiums for a limited number of years. With the limited pay life insurance option, you pay premiums in the first 10, 15, or 20 years of ownership, but the benefits last a lifetime. A straight life annuity/policy is a retirement income product that pays a benefit until death but forgoes any further beneficiary payments or a death benefit.

all other factors being equal, the least expensive first-year premium payment is found in a) increasing term b) decreasing term c) level term d) annually renewable term

d) annually renewable term ^^ is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.

which of the following is INCORRECT regarding a $100,000 20-year level term policy? A. The policy premiums will remain level for 20 years B. If the insured dies before the policy expired, the beneficiary will receive $100,000 C. The policy will expire at the end of the 20-year period D. At the end of 20 years, the policy's cash value will equal $100,000

d) at the end of 20 years, the policy's cash value will equal $100,000 term policies do not develop cash values

an employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his a) experience rating b) group rate c) insurer's scheduled rate d) attained age

d) attained age if an employee terminates membership in the insured group, the employee has the right to convert to an individual whole life policy without proving insurability. the insurer will determine what type(s) of policy an employee may convert to, but it must be issued at a standard rate, based on their attained age.

what is the main purpose of the Seven-pay Test? a) it requires level premium payments for 7 years b) it ensures that the policy benefits are paid out in 7 years c) it guarantees the minimum interest d) it determines if the insurance policy is a MEC

d) it determines if the insurance policy is a MEC the Seven-pay Test determines whether an insurance policy is "over-funded" or if it's a Modified Endowment Contract. In other words, the cumulative premiums paid during the first seven years of a policy must not exceed the total amount of net level premiums that would be required to pay the policy up using guaranteed mortality costs and interest What happens when life insurance becomes a MEC? When a permanent life insurance policy becomes an MEC, you can no longer make tax-free withdrawals from the cash value. Before age 59 ½ you'll pay taxes and a 10% fee to access your money. After age 59 ½ you'll still pay taxes, but with no additional penalty.

which option for universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? a) corridor option b) variable option c) option A d) option B

d) option B under option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. at any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value think option "B" death "B"enefit

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a) purchase a term rider to attach to the policy b) pay back all premiums owed plus interest c) receive payments for a fixed amount d) purchase a single premium policy for a reduced face amount

d) purchase a single premium policy for a reduced face amount when a whole life policy lapses or is surrendered prior to maturity, the cash value can be used by the insurer as a single premium to purchase a completely paid up permanent policy that has a reduced face amount from that of the former policy

all of the following are types of term insurance depending on how the face amount changes during the policy term EXCEPT a) decreasing b) level c) increasing d) renewable

d) renewable there are 3 basic types of term coverage available, based on how the face amount (death benefit) changes during the policy term: Level, Increasing, Decreasing. Regardless of the type of term insurance purchased, the premium is often level throughout the term of the policy. Only the amount of the death benefit may fluctuate.

a person steps off a street car and trips and breaks his ankle. this type of injury can be described as a) a recurrent injury b) intentional c) not covered d) sudden and unforeseen

d) sudden and unforeseen

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?

interest only if a beneficiary receives payments that contain both principal and interest portions, only the interest is taxable as income

which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?

medical information part 2 - medical information of the application includes information on the prospective insured's medical background, present health, any medical visits in recent years, medical status of living relatives, and causes of death of deceased relatives

how is gross annual premium described?

net premium plus expenses gross annual premium is net premium + expenses (loading)

if an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about ____________

whether an insurable interest exists between the individuals (spouses, children, certain business relations)

within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

which of the following riders would NOT increase the premium for a policy? a) impairment rider b) payor benefit rider c) waiver of premium rider

a) impairment rider

Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months?

30 months the Omnibus Budget Reconciliation Act requires it

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?

$3,000 the difference btw the premiums paid and the cash value would be taxable. in this example, the difference between the premiums paid ($15,000) and the cash value ($18,000) is $3,000

According to OBRA, what is the minimum number of employees required to constitute a large group?

100 There must be at least 100 employees in order to qualify for OBRA large-group status. the act states that plans must provide primary coverage for disabled individuals under age 65 who are not retired

For how many days of skilled nursing facility care will Medicare pay benefits?

100 treatment in a skilled nursing facility is covered in full for the first 20 days. from the 21st to the 100th day, the patient must pay the daily copayment. there are no medicare benefits provided for treatment in a skilled nursing facility beyond 100 days

every order by the commissioner suspending any insurance license must specify the period during which the suspension will be effective and may not last longer than

12 months

a noncontributory group disability income plan has a 30-day waiting period and offers benefits of $2,000 a month. if an employee is unable to work for 7 months due to a covered disability, the employee will receive a) $12,000, all of which is taxable b) $14,000, none of which is taxable c) $14,000, all of which is taxable d) $12,000, none of which is taxable

a) $12,000, all of which is taxable

the relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to their average income over what period of time? a) 2 years b) 6 months c) 1 year d) 18 months

a) 2 years

According to the PPACA rules, what percentage of health care costs will be covered under a bronze plan? a) 30% b) 40% c) 60%

c) 60%

which component increases in the increasing term insurance? a) death benefit b) cash value c) interest on the proceeds d) premium

death benefit

which of the following statements pertaining to Medicare Part A is correct? A) medicare part a is automatically provided when an individual qualifies for social security benefits at age 65 b) for the first 90 days of hospitalization, medicare part A pays 100%of all covered services, except for the initial deductible c) individuals with ESRD do not qualify for Part A d) each individual covered by medicare part A is allowed one 90-day benefit period per year

A) medicare part a is automatically provided when an individual qualifies for social security benefits at age 65 workers who have paid FICA taxes automatically qualify for medicare part A at age 65. Part A has been prepaid through the FICA taxes. workers who qualify for Part A are also eligible for Part B; however, it requires that a monthly premium is withheld from social security benefits

When a group disability insurance plan is paid entirely by the employer, benefits paid to disabled employees are A. taxable income to the employee B. deductible income to the employee C. deductible business expenses to the employer D. taxable income to the employer

A. taxable income to the employee disability benefit payments that are attributed to employee contributions are not taxable, but benefits payments that are attributed to employer contributions are taxable

an insurer is soliciting an individual disability insurance policy to a 67-year-old applicant. which of the following statements must be printed on the first page of the outline of coverage for the policy? a) "this is not a medicare supplement policy" b) "this is a limited benefit policy" c) "this is a disability income policy" d) "this policy duplicates medicare benefits"

a) "this is not a medicare supplement policy" any health or disability policy that solicits or provides coverage to state residents eligible for medicare must notify the applicants or policyholders that the policy is NOT a medicare supplement policy. the notice must be printed on or attached to the first page of the outline of coverage or another disclosure form

L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay? a) $900 (deductibles + 20% of the bill after the deductible [20% of $2,000] b) $500 (amount of deductible) c) $1,000 (deductible + 20% of the entire bill)

a) $900 (deductibles + 20% of the bill after the deductible [20% of $2,000] L would first pay the $500 deductible; out of the remaining $2,000, the insurer will pay 80% ($1,600) and the insured will pay 20% ($400)

which of the following must the patient pay under Medicare Part B? a) 20% of covered charges above the deductible b) 80% of covered charges above the deductible c) all reasonable charges above the deductible according to medicare standards d) a per benefit deductible

a) 20% of covered charges above the deductible

how long is an open enrollment period for Medicare supplement policies? a) 6 months b) 1 year c) 30 days d) 90 days

a) 6 months Under federal law, you have a six-month open enrollment period that begins the month you are 65 or older and enrolled in Medicare Part B. During your open enrollment period, Medigap companies must sell you a policy at the best available rate regardless of your health status, and they cannot deny you coverage

Prior to purchasing a Medigap policy, a person must be enrolled in which of the following? a) Parts A and B of Medicare b) all four parts of medicare c) any private insurance policy d) only part A of medicare

a) Parts A and B of Medicare

all of the following individuals may qualify for medicare health insurance benefits EXCEPT a) a retired person age 50 b) a healthy person age 65 c) a person age 45 who has a permanent kidney failure d) a person under age 65 who is received social security disability benefits

a) a retired person age 50

what document grants express authority to an agent? a) agent's contract with the principal b) agent's insurance license c) fiduciary contract d) state provisions

a) agent's contract with the principal

In which Medicare supplemental policies are the core benefits found? a) all plans b) plans a and b only c) plan a only d) plans a-d only

a) all plans the benefits in plan A are considered to be core benefits and must be included in other types. therefore, all types contain the core benefits offered by plan A

in insurance, an offer is usually made when a) an applicant submits an application to the insurer b) the insurer approves the application and receives the initial premium c) the agent hands the policy to the policyholder d) an agent explains a policy to a potential applicant

a) an applicant submits an application to the insurer offer = submitting an application acceptance = underwriter approves app and issues policy

in disability income insurance, if an insured is considered they cannot perform any job they are suited for by prior education, training or experience, they fall under which definition of total disability? a) any occupation b) typical c) statutory d) own occupation

a) any occupation "own-occupation" policy will define "total disability" as a condition that prevents the insured from performing the substantial and material duties of their regular job, while an "any-occupation policy" will simply define "total disability" as being unable to work in any occupation.

an individual is insured under his employer's group disability income policy. the insured suffered an accident while on vacation that left him unable to work for 4 months. if the disability income policy pays the benefit, which of the following would be true? a) benefits that are attributable to employer contributions are fully taxable to the employees as income b) the insured has to wait 2 more months to start receiving benefits c) for the business, payments are not considered tax deductible as an ordinary business expense d) the insured can deduct his medical expense benefits from his income tax

a) benefits that are attributable to employer contributions are fully taxable to the employees as income

all of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT a) death benefits are paid only if death occurs within 24 hours of an accident b) accidental death benefits are paid only if death results from accidental bodily injury as defined in the policy c) accidental death and dismemberment insurance is considered to be limited coverage

a) death benefits are paid only if death occurs within 24 hours of an accident the death benefit will be paid if the accidental death occurs within 90 days of the accident, not 24 hours

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? a) employee benefits are tax deductible the year in which they were received b) benefits received by the employee are free from federal income tax c) premiums paid by the employer are deductible as a business expense d) employee paid premiums may be deducted if certain conditions are met

a) employee benefits are tax deductible the year in which they were received for group medical and dental expense insurance any premium paid by the employer is deductible as a business expense. however, any premiums provided by the employee are only deductible if certain conditions are met. group medical and dental expense benefits are received income tax free by the employee

OBRA requires which disease to be covered by an employer for 30 months before Medicare becomes the primary mode of coverage? a) end-stage renal failure b) black lung c) leukemia d) end-stage heart failure

a) end-stage renal failure OBRA requires end-stage kidney (renal) failure to be covered by an employer for 30 months before medicare becomes the primary mode of coverage

which of the following statements is correct concerning taxation of long-term care insurance? a) excessive benefits may be taxable b) benefits may be taxable as ordinary income c) premiums may be taxable as income d) premiums are not deductible in any case

a) excessive benefits may be taxable regardless of whether or not the insured can deduct individual long-term care premiums, the benefits are received income tax free by the individual. excessive benefits as determined by statute are taxable as ordinary income

an insurance company assures its new policyholders that their premium costs will not increase for a period of at least 5 years. however, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next 2 years. what term best describes this act? a) fraud b) defamation c) unfair discrimination d) errors and omissions

a) fraud

which of the following information would be explained in the Buyer's Guide? a) generic information about different types of life insurance policies b) guaranteed and projected policy returns c) insurer's and agents contact information d) specified information about policy benefits and premiums

a) generic information about different types of life insurance policies

which of the following is INCORRECT concerning taxation of disability income benefits? a) if paid by the individual, the premiums are tax deductible b) if the employer paid the premiums, income benefits are taxable to the insured as ordinary income c) if the insured paid the premiums, any disability income benefits are tax-free d) if the benefits are for a permanent loss, the benefits paid to the employee are not taxable

a) if paid by the individual, the premiums are tax deductible an individual purchases their own disability insurance with before-tax dollars, any benefits paid are tax free, but the premium is not tax deductible. if an employer pays the premium, the employer may deduct the premium as a business expense. any benefits paid to an employee are taxable, unless it is for the permanent loss of a body part, or loss of use of a body part

which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a) insuring clause b) entire contract clause c) beneficiary clause d) consideration clause

a) insuring clause the insuring clause states that the insurer agrees to provide life insurance for the named insured which will be paid to an designated ben when proof of loss is received by the insurer. it states the party to be covered by the policy and names of the ben who will receive the policy proceeds in the event of the insured's death.

in group insurance, what is the policy called? a) master policy b) entire contract c) certificate of authority d) certificate of insurance

a) master policy in group insurance the policy is called the master policy and is issued to the policyowner, which could be the employer, an association, a union, a trust

which of the following statements is NOT correct regarding Medicare? a) medicare advantages must be provided through HMOs b) medicare advantage may include prescription drug coverage at no cost c) medicaid part a provides hospital care d) medicare part b provides physician services

a) medicare advantages must be provided through HMOs medicare part A provides hospital care; medicare part B provides doctors and physician services, and medicare advantage (previously medicare+choice) offers benefits for a fee through private health insurance programs such as HMOs and PPOs

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? a) mutual b) reciprocal c) nonprofit service organization d) stock

a) mutual funds not paid out after paying claims and other operating costs are returned to policyowner in form of a dividend. if all funds are paid out, no dividends are paid

under which of the following employer-provided plans are the benefit taxable to an employee in proportion to the amount of premium paid by the employer? a) basic medical expense b) disability income c) major medical d) dental expense

b) disability income

in an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. what income taxation will be imposed on the benefits received? a) no tax b) tax deductible c) state income d) federal income tax

a) no tax daily benefits from the LTC policy are received income tax free, as long as they do not exceed the daily cost of long-term care

Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage? a) no, the group must be formed for a purpose other than obtaining group insurance b) no, a group of individuals cannot apply for group coverage unless represented by an associated or trust c) yes, any group can apply for group coverage d) yes, but only if the group is over 35 people

a) no, the group must be formed for a purpose other than obtaining group insurance

an insured purchased a disability income policy with a 10-year benefit period. the policy states a 20-day probationary period for illness. if the insured is hospitalized with an illness 2 weeks after the policy was issued, how much will the policy pay? a) nothing; illness is not covered during the first 20 days of the contract b) the insured will receive a return of premium c) it will pay up to 10 years of benefits d) it will pay until the insured is released from the hospital

a) nothing; illness is not covered during the first 20 days of the contract loss by illness is not covered if it occurs during the probationary period

a 55-year old employee has worked part-time for his new employer 3 months now, but has not been offered health insurance. what factor has limited the employee's eligibility? a) number of hours worked per week b) the total amount of time worked for the company c) age d) income

a) number of hours worked per week part-time vs full-time

A producer did not do his research and placed insurance coverage through an unauthorized insurer. When this becomes known, what may the commissioner do? a) order a policy replacement b) cancel the policy c) allow the policy in force, but fine the producer d) issue a certificate of authority for that insurer

a) order a policy replacement

an insured pays her major medical insurance premium annually on March 1st. last March she got to mail her premium to the company. on the March 19, she had an accident and broke her leg. the insurance company would a) pay the claim b) hold the claim as pending until the end of the grace period c) deny the claim d) pay half of her claim bc the insured had an outstanding premium

a) pay the claim since the accident occurred during the grace period, the insurance company will pay the claim

all of the following are covered by Part A of Medicare EXCEPT a) physician's and surgeon's services b) in-patient hospital services c) post-hospital nursing care d) home health services

a) physician's and surgeon's services physician's and surgeon's services are covered under Part B

Regarding the taxation of Business Overhead policies, a) premiums are deductible, and benefits are taxed b) premiums are not deductible, and benefits are taxed c) premiums are not deductible, but benefits are deductible d) premiums are not deductible, but expenses paid are deductible

a) premiums are deductible, and benefits are taxed

which of the following are the main factors taken into account when calculating residual disability benefits? a) present earnings and earnings prior to disability b) earnings prior to disability and the length of disability c) employee's full-time status and length of disability d) present earnings and standard cost of living

a) present earnings and earnings prior to disability residual disability will help pay for loss of earnings by making up the difference btw the employee's present earnings and what they were prior to disability

A man's physician submits claim information to his insurer before she actually performs a medical procedure on him. She is doing this to see if the procedure is covered under the patient's insurance plan and for how much. This is an example of a) prospective review b) concurrent review c) claims-delayed treatment d) suspended treatment

a) prospective review under the prospective review or pre-certification provision, the physician can submit claim information prior to providing treatment to know in advance if the procedure is covered under the insured's plan and at what rate it will be paid

which of the following is NOT covered under Part B of a Medicare policy? a) routine dental care b) home health care c) lab services d) physician expenses

a) routine dental care medicare part B covers dental expense resulting from an accident only

the ownership provision entitles the policyowner to do all of the following EXCEPT a) set premium rates b) receive a policy loan c) assign the policy d) designate a beneficiary

a) set premium rates the insurer sets premium rates based upon underwriting considerations

How do employer contributions to a Health Savings Account affect the insured's taxes? a) the employer contributions are not included in the individual insured's taxable income b) the employer contributions are taxed at the same rate as the social security tax rate c) the employer contributions are taxed to the individual as earned income d) the employer contributions are deducted from their tax calculations

a) the employer contributions are not included in the individual insured's taxable income

How do employer contributions to a Health Savings Account affect the insured's taxes? a) the employer contributions are not included in the individual insured's taxable income b) the employer contributions are taxed at the same rate as the social security tax rate c) the employer contributions are taxed to the individual insured as earned income d) the employer contributions are deducted from the individual insured's tax calculations

a) the employer contributions are not included in the individual insured's taxable income HSA contributions made by an employer are not included in the determined of an individual's taxable income

which of the following is NOT the purpose of HIPAA? a) to provide immediate to coverage to new employees who had been previously covered for 18 months b) to guarantee the right to buy individual policies to eligible individuals c) to prohibit discrimination against employees based on their health status d) to limit exclusions for pre-existing conditions

a) to provide immediate to coverage to new employees who had been previously covered for 18 months HIPAA does not prohibit employers or providers from establishing waiting periods or pre-existing conditions exclusions, in which case the coverage to new employees would not be immediate The Health Insurance Portability and Accountability Act (HIPAA) The primary purpose of HIPAA rules is to protect health care coverage for individuals who lose or change their jobs, and - to guarantee the right to buy individual policies to eligible individuals - to prohibit discrimination against employees based on their health status - to limit exclusions for pre-existing conditions

under what condition are group disability income benefits received by an employee NOT taxable as income? a) when the benefits received are equal or less than the employee's % of the contribution b) when the employer makes all the premium payments c) when the employee is 59.5 d) when the amount of the benefit is equal or less than the amount of the contributed by the employer

a) when the benefits received are equal or less than the employee's % of the contribution

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce a) without receiving written consent from an insurance regulatory authority b) under any circumstances c) unless they have served an appropriate prison sentence d) without receiving written consent from a federal judge

a) without receiving written consent from an insurance regulatory authority

a client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. how many days of disability benefits will be the policy pay? a) 10 days b) 15 days c) 25 days d) 45 days

b) 15 days a probationary period refers to the amount of time that coverage is not available for illness-related disabilities, so it would not apply to a broken leg. the elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start. in this case, the individual is considered disabled for 45 days, and the benefits will start to be paid after 30 days. so, the client will receive benefits for 15 days

Omnibus Budget Reconciliation Act of 1990 requires that large group health plans must provide primary coverage for disabled individuals under a) age 59.5 who are retired b) age 65 who are not retired c) age 59.5 who are not retired d) age 65 who are retired

b) age 65 who are not retired

in reference to the standard medicare supplement benefits plans, what does the term standard mean? a) coverage options and conditions are developed for average individuals b) all providers will have the same coverage options and conditions for each plan c) coverage options and conditions comply with the law, but will vary from provider to provider d) all plans must include basic benefits A-N

b) all providers will have the same coverage options and conditions for each plan

under which condition would an employee's group medical benefits be exempt from income taxes? a) when the premiums and other unreimbursed medical expenses exceed 10% of the employee's adjusted gross income b) an employee's group medical benefits are generally exempt from taxation as income c) an employee's group medical benefits are never exempt from taxation as income d) when the premiums and other unreimbursed medical expenses exceed 5% of the employee's adjusted gross income

b) an employee's group medical benefits are generally exempt from taxation as income group medical and dental benefits received tax-free to employees. also, premiums paid by the employer are deductible as business expenses

While a claim is pending, an insurance company may require a) an independent exam only once every 45 days b) an independent exam as often as reasonably required c) the insured to be examined only within the first 30 days d) the insured to be examined only once annually

b) an independent exam as often as reasonably required

which of the following statements is true concerning the alternation of optional policy provisions? a) once any kind of provision is written, it cannot be changed b) an insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder c) an insurer may change the wording of optional provisions, regardless of its effect on the policyholder d) "" that would adversely affect the policyholder but must first receive state permission before the change goes into effect

b) an insurer may change the wording of optional provisions, as long as the change does not adversely affect the policyholder optional policy provisions can be changed by an insurer, as long as the changes do not adversely affect the policyholder

which of the following hospice expenses would NOT be covered in a cost-containment setting? a) special hospital bed b) antibiotics c) tylenol d) morphine

b) antibiotics in a cost-containment setting, daily needs and pain relief are provided for hospice patients, but curative measures are not

When an insurer offers services like pre-admission testing, second opinions regarding surgery, and preventative care, which term would best apply? a) claims discrimination b) case management provision c) cost reduction d) claims reduction

b) case management provision cost-saving services, aka "case management provisions", include the following: controlled access of providers, large claim management, preventive care, hospitalization alternatives, second surgical opinions, pre-admissions testing, catastrophic case management, risk sharing, and providing high quality of care

To legally transact insurance in this state, an insurer must obtain which of the following? a) certificate of insurance b) certificate of authority c) power of authority d) business entity license

b) certificate of authority

which of the following would NOT be used in preventive care? a) mammogram b) chemotherapy c) pap smear d) annual physical exam

b) chemotherapy managed care plans encourage preventive care and living a healthier lifestyle. annual physical exams, mammograms, and other procedures used to detect medical problems before symptoms appear can result in a considerable costs savings if a problem is detected early and treated quickly

An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure that everything proceeds according to the insurer's schedule. This is called a) schedule of benefits b) concurrent review c) comprehensive review d) prospective review

b) concurrent review under the concurrent review process, the insurance company will monitor the insured's hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned

which of the following provisions requires that any policies language that is in conflict with the state statutes of the state in which the insured resides is automatically amended to conform with those of the state of residence? a) legal actions b) conformity with state statutes c) incontestability d) insurance with other insurers

b) conformity with state statutes

if an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days? a) renewability b) conversion c) replacement d) grace period

b) conversion conversion provisions are required by law. it allows terminated employees to convert their group health coverage to individual insurance without evidence of insurability, within a specified amount of time, and for eligible reasons

Which rider, when added to a disability income policy, provides for changes in the benefits payable based on changes in the consumer price index? a) guaranteed insurability rider b) cost of living adjustment rider c) waiver of premium rider d) social security rider

b) cost of living adjustment rider this rider allows for the indexing of benefits payable under a disability policy to changes in the consumer price index

a waiver of premium provision may be included with which kind of health insurance policy? a) dread disease b) disability income c) basic medical d) hospital indemnity

b) disability income a waiver of premium rider generally is included with guarantee renewable and noncancellable individual disability income policies. it is valuable provision bc it exempts the insured from paying the policy's premium during periods of total disability

under which of the following employer-provided plans are the benefits taxable to an employee in proportion to the amount of premium paid by the employer? a) basic medical expense b) disability income c) major medical d) dental expense

b) disability income the part of the benefit that is provided by the employer's contribution is income taxable to the employee

which of the following is NOT covered by health maintenance organizations (HMOs)? a) immunizations b) elective services c) routine physicians d) well-baby care

b) elective services HMOs emphasize preventative health care as a method of reducing medical expenses by early detection of health problems before they may require more costly treatment

what are the 2 types of Flexible Spending Accounts? a) medical savings accounts and health reimbursement accounts b) health care accounts and dependent care accounts c) health care accounts and health reimbursement accounts

b) health care accounts and dependent care accounts there are 2 types of Flexible Spending Account; a health care account for out-of-pocket health care expenses, and a dependent care account to help pay for dependent care expenses which make it possible for an employee and their spouse, if applicable, to work

Medicaid provides all of the following benefits EXCEPT a) family planning services b) income assistance for work-related injury c) home health care services d) eyeglasses

b) income assistance for work-related injury medicaid covers a variety of medical costs, from eyeglasses to hospitalization work-related injury benefits would be paid out by workers comp

which benefits would a disability plan most likely pay? a) medical expenses associated with a disability b) income lost by the insured's inability to work c) rehab costs d) copayments

b) income lost by the insured's inability to work disability benefits are paid to those who are unable to work as they normally would, due to an accident or illness. benefits are designed to help the insurer recover income lost as a result of the disability. the amount of benefits that an insured receives is determined by the insured's earned income and is usually limited to a certain percentage of that amount

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will a) keep the premium and reject the risk on the basis that the applicant died before the policy could be issued b) issue the policy anyway and pay the face value to the ben c) negotiate a reduced settlement with the ben due to the unusual circumstances involved d) return the premium to Y's estate, since it has no obligation to pay the death claim

b) issue the policy anyway and pay the face value to the beneficiary the conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for

which of the following programs expands individual public assistance for people with insufficient income and resources? a) unemployment compensation b) medicaid c) medicare d) social security

b) medicaid Medicaid is a "needs" tested program administered by the states to provide assistance to persons who are not able to provide for themselves Medicare vs Medicaid MediCARE is a federal program that provides health coverage if you are 65+ or under 65 and have a disability, no matter your income. (CARE for elderly and disabled) MedicAID is a state and federal program that provides health coverage if you have a very low income (financial AID) - They will work together to provide you with health coverage and lower your costs

all of the following statements concerning Medicaid are correct EXCEPT a) persons, at least 65 years of age, who are blind or disabled and financially unable to pay, may qualify for medicaid nursing home benefits b) medicaid is a state funded program that provides health care to persons over age 65, only c) individual states design and administer the medicaid program under guidelines established by the federal government d) individuals claiming benefits must prove they do not have the ability or means to pay for their own medical care

b) medicaid is a state funded program that provides health care to persons over age 65, only medicaid is a government funded (both state and federal) program designed to provide health care to poor people of all ages

Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is a) biweekly b) monthly c) within 45 days d) weekly

b) monthly if a claim involves disability income benefits, the policy must pay those benefits not less frequently than monthly, in all other cases, the company may specify the time period of 45 or 60 days for payment of claims

the primary eligibility requirement for medicaid benefits is based upon a) number of dependents b) need c) whether the claimants is insurable on the private market d) age

b) need medicaid is a program operated by the state, with some federal funding, to provide medical care for those in need

which of the following riders would NOT cause the Death Benefit to increase? a) accidental death rider b) payor benefit c) guaranteed insurability rider d) cost of living rider

b) payor benefit - Payor Benefit Rider does not increase the DB; it only pays the premium if the payor is disabled or dies. - Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events (ex: marriage or birth of a child); - Cost of Living Rider increases DB to keep pace with inflation; - Accidental Death Rider, if the insured dies from an accident, DB is a multiple of the face amount

which of the following factors would be an underwriting consideration for a small employer carrier? a) medical history of the employees b) percentage of participation c) claims experience d) health status

b) percentage of participation coverage under a small employer health benefit plan is generally available only is at least 75% of eligible employees elect to be covered

which of the following must be present in all Medicare supplement plans? a) plan C coinsurance b) plan A c) foreign travel provisions d) outpatient drugs

b) plan A in order to standardize the coverage provided under Medicare supplement policies, the NAIC has developed standard medicare supplement benefit plans which are identified with the letters A through N. the benefits in a plan A are considered to be core benefits and must be included in the other types

the purpose of insurance regulation is to a) make insurance companies pay taxes b) promote the public welfare c) make insurance statutes uniform between states d) keep agents honest

b) promote the public welfare

which of the following may NOT be included in an insurance company's ad? a) an identification of a limited policy as a limited policy b) that its policies are covered by a state guaranty association c) the policies limitations or exclusions d) the name of a specific agent

b) that its policies are covered by a state guaranty association it is illegal for insurers to state that their policies are guaranteed by the existence of a guaranty association

who is required to pay the fee for an insurance producer's appointment? a) the commissioner b) the appointing insurer c) there is no appointment fee d) the insurance producer

b) the appointing insurer insurer must pay an appointment fee for each producer it appoints

what type of information is NOT included in a certificate of insurance? a) the length of coverage b) the cost the company is paying for monthly premiums c) the policy benefits and exclusions d) the procedures for filing a claim

b) the cost the company is paying for monthly premiums the individuals covered under the insurance contract are issued certificates of insurance. the certificate tells what is covered in the policy, how to file a claim, how long the coverage will last, and how to convert the policy to an individual policy

if a business wants to buy a disability income policy on a key employee, which of the following is considered the beneficiary? a) the producer b) the employer c) the insurer d) the employee

b) the employer in key person disability insurance purchased by a business, the business is the policyowner and the beneficiary, and the key person is the insured

which of the following statements concerning group health insurance is CORRECT? a) under group insurance, the insurer may reject individuals from coverage b) the employer is the policyholder c) only the employer receives a certificate of insurance d) each employee receives a policy

b) the employer is the policyholder the employer receives the master policy; each employee receives a certificate of insurance. all employees have the same coverage under the master contract

which of the following is an agreement between an insured and an insurer, where the insurer agrees to indemnity the insured for specific losses in exchange for a premium? a) the indemnity clause b) the insurance contract c) the insurance guaranty d) reciprocity

b) the insurance contract Indemnity is a type of insurance policy where the insurance company guarantees compensation for losses or damages sustained by a policyholder.

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to a) the spouse of the insured b) the insured c) creditors d) beneficiary of the death benefit

b) the insured payments for loss of life benefits are to be made to the designated ben. if no be has been named, payments go to their estate.

an insured submitted a notice of claim to the insurer, but never received claims forms. he later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. which of the following would be true? a) the insured must submit proof of loss to the department of insurance b) the insured was in compliance with the policy requirements regarding claims c) the claim most likely will not be paid since the official claims form was not submitted d) the insurer will be fined for not providing the claims forms

b) the insured was in compliance with the policy requirements regarding claims If claims forms are not furnished to the insured, the claimant is deemed to have complied with the requirements of the policy if he or she submits written proof of the occurrence, nature of loss, and extent to the insurer

a producer has been convicted of a felony. how will that affect the producer's license? a) the license will be suspended for up to 12 months b) the license may be revoked immediately c) the license may only be revoked with a 30-day notice

b) the license may be revoked immediately any type of fraud or misrep is a violation that may cause a license to be denied, suspended/revoked. if a producer is convicted of a felony, the commissioner may revoke or refuse to renew the producer's license immediately and without hearing if the facts heading to the conviction show the licensee to be untrustworthy

which of the following is true regarding elimination periods and the cost of coverage? a) elimination periods have no effect on the cost of coverage b) the longer the elimination period, the lower the cost of coverage c) the shorter the elimination period, the lower the cost of coverage d) the longer the elimination period, the higher the cost of coverage

b) the longer the elimination period, the lower the cost of coverage (longer and lower) the "elimination period" is a period of days which must expire after the onset of an illness or occurrence of an accident before benefits will be payable. the longer the elimination period is, the lower the cost of coverage will be The elimination period begins on the day you become disabled and is the length of time you must wait while being disabled before you are eligible to receive a benefit.

The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say? a) the proceeds will be split evenly between the two bens b) the policyholder can specify the way proceeds are split in policy c) the way proceeds are split between bens is decided by which type of policy is chosen d) life insurance policies may have only one ben

b) the policyholder can specify the way proceeds are split in policy

hospice care is intended for a) the caregiver b) the terminally ill c) people in need of acute care d) home health visits from a participating home health agency

b) the terminally ill under certain conditions, hospital insurance can help pay for hospice care for terminally insureds, if the care is provided by a medicare-certified hospice

which of the following statements is TRUE concerning irrevocable beneficiaries? a) they may be changed only on the anniversary date of the policy b) they can be changed only with the written consent of the ben c) they may changed at any time d) they can never be changed

b) they can be changed only with the written consent of the beneficiary

which provision states that the insurance company must pay medical expense claims immediately? a) relation of earnings to insurance b) time of payment of claims c) payment of claims d) legal actions

b) time of payment of claims the time payment of claims provision requires that claims will be paid immediately upon receipt pf proofs of loss except for periodic payments, which are to be paid as specified in the policy

an insured owes his insurer a premium payment. since then, he incurs medical expenses. the insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. what provision allows for this? a) payment of claims b) unpaid premium c) legal action d) proof of loss

b) unpaid premium if a premium is past due and the insurer owes claim payment, the amount of the premium will be deducted from the amount of the claim. for example, if a claim is worth $500 and the premium costs $200, the insured would receive the net total of $300 from his insurer

In forming an insurance contract, when does acceptance usually occur? a) when an insured submits an application b) when an insurer's underwriter approves coverage c) when an insurer delivers the policy d) when an insurer receives an application

b) when an insurer's underwriter approves coverage the Offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy

Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days? a) 80 b) 3 c) 20 d) 100

c) 20 following hospitalization for at least 3 days, if medically necessary, Medicare pays for all covered services during the first 20 days in a skilled nursing facility. days 21 through 100 require a daily copayment

how long does any person receiving written notification of the commission's order have to respond and request a hearing? a) 30 days b) 60 days c) 90 days d) 120 days

c) 90 days

all of the following would be qualified as a dependent under a Dependent Care Flexible Spending Account, EXCEPT a) Matt must be constantly watched due to his violent muscle spasms which often lead to Matt injuring himself b) Pete is severely autistic and refuses to take care of his own personal needs, which are taken care of by his father c) Jeremy had to have both legs amputated, but has learned how to take care of himself and to get around in a wheelchair d) Joe was paralyzed from the neck down in car accident and is cared for by his wife

c) Jeremy had to have both legs amputated, but has learned how to take care of himself and to get around in a wheelchair Persons who cannot dress, clean, or feed themselves bc of physical or mental problems are considered not able to care for themselves. also, persons who must have constant attention to prevent from injuring themselves or others are considered not able to care for themselves

Jason is insured under his employer's group health insurance. He splits the cost of the premiums with his employer. This is an example of a) a half and half plan b) a co-pay plan c) a contributory plan d) a noncontributory plan

c) a contributory plan with a contributory plan the eligible employees contribute to payment of the premium (both the employee and employer pay part of the premium)

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? a) an individual who doesn't qualify for medicare may be eligible b) the gap of coverage for eligibility is a period of 63 or less days c) an individual who was previously covered by group health insurance for 6 months is eligible d) an individual who has used up COBRA continuation coverage is eligible

c) an individual who was previously covered by group health insurance for 6 months is eligible all of these eligibility requirements are correct, except an individual who was previously covered for at least 6 months, HIPAA requires that the individual have a previous continuous creditable health coverage for at least 18 months

individual disability insurance policies cannot be delivered or issued for delivery in this state UNLESS a) the insured parties are ineligible for a group plan b) all aspects of health insurance coverage have been included in the policy c) an outline of coverage is furnished to the applicant d) the insured parties are in excellent health with no pre-existing conditions

c) an outline of coverage is furnished to the applicant

application forms for medicare supplement policies are required to include questions designed to elicit information as to whether as of the date of the application, the applicant has a) ever been diagnosed with a condition that would cause the insurer to take of "catastrophic liability" by insuring the applicant b) reason to believe that they will not be able to pay future premiums within the 70/30 state required asset ratio c) another medicare supplement insurance or other disability policy in force and whether the proposed policy is intended to replace any existing policy d) none of the above is required for medicare supplement policies in this state

c) another medicare supplement insurance or other disability policy in force and whether the proposed policy is intended to replace any existing policy

a man is still employed at age 65 and is now eligible for medicare. he wants to know what health insurance coverage he is eligible to receive. which of the following options are available to him? a) reapplication for group health b) medicare only c) both group health and medicare d) continuation of group health only

c) both group health and medicare if a person is still employed at the age of 65, he or she may choose to either continue group coverage and defer medicare until retirement, or switch to medicare. the employer cannot provide incentives for switching to medicare

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability? a) disability buy-sell agreement b) business disability policy c) business overhead expense policy d) key person insurance

c) business overhead expense policy business overhead expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for various business overhead expenses during a period of total disability. expenses such as rent, utilities, and employee salaries are covered

if an applicant for a health insurance policy is found to be substandard risk, the insurance company is most likely to a) lower its insurability standards b) refuse to issue the policy c) charge an extra premium d) require a yearly medical examination

c) charge an extra premium the premium rate will be adjusted to reflect the insurer's increased risk

all of the following are true about group disability income insurance EXCEPT a) the waiting period starts at the onset of the injury or sickness b) the longer the waiting period, the lower the premium c) coverage applies both on and off the job d) benefits are usually short term

c) coverage applies both on and off the job employees who are injured on the job are covered by workers compensation insurance. group disability income insurance is designed to cover employees only while they are off the job, so the coverage is considered to be nonoccupational in nature

according to the future increase option rider (FIO), which of the following is NOT a qualifying event to increase an insured's benefit level? a) marriage b) birth of a child c) death of a spouse d) age 40

c) death of a spouse FIO rider allows insured's to increase their benefit levels to certain amounts at specific times without proof of insurability. the following are the typical occasions when an insurer allows for a benefit increase: ages 25, 28, 31, 34, 37, and 40; marriage, and the birth of a child

group disability income insurance premiums paid by the employer are a) tax deductible by the employee b) tax deferred to the employer c) deductible by the employer as an ordinary business expense d) taxable to the employee

c) deductible by the employer as an ordinary business expense group disability income premium paid by the employer is considered tax deductible by the business as an ordinary business expense. the premium payments are neither taxable nor tax deductible to the employee

what is an important feature of a dental expense insurance plan that is NOT typically found in a medical expense insurance plan? a) a low monthly premium b) low cost deductibles c) diagnostic and preventive care d) a broad coverage area

c) diagnostic and preventive care dental expense insurance is a form of medical expense health insurance that covers the treatment, care and prevention of dental disease and injury to the insureds teeth. an important feature of the a dental insurance plan which is typically not found in a medical expense insurance plan is the inclusion of diagnostic and preventative care (teeth cleaning, fluoride treatment)

Other than for a qualified life event, when can a change be made in benefits for a Flexible Spending Account (FSA)? a) within 3 months of the cause of the change b) no changes can be made once the policy is issued c) during the open enrollment period d) at any time as necessary

c) during the open enrollment period FSA benefits may be changed during open enrollment, unless the circumstances are deemed a Qualified Life Event

all of the following are advantages of an HMO or PPO for a Medicare recipient EXCEPT a) health care costs can be budgeted b) there are no claims forms required c) elective cosmetic procedures are covered d) prescriptions might be covered, unlike Medicare

c) elective cosmetic procedures are covered the advantages of an HMO or PPO for a medicare recipient may be that there are no claims forms required, almost any medical problem is covered for a set fee so health costs can be budgeted, and the HMO or PPO may pay for services not usually covered by medicare or medicare supplement policies, such as prescriptions, eye exams, hearing aids, or dental care

once a producer has met the requirements to sell long-term insurance, how often must the producer complete the 4 hours of ongoing training courses? a) every 48 months b) every 12 months c) every 24 months d) every 36 months

c) every 24 months every agent who sells, solicits or negotiates long-term insurance in Washington must be license as in insurance producer for life & disability and complete a one-time training course and then ongoing training every 24 months

What does "level" refer to in level term insurance? a) cash value b) interest rate c) face amount d) premium

c) face amount level term policies maintain level death benefit (or face amount) throughout the term of the policy. in the level term insurance, the premium also remains consistent over the years, unlike the premiums of many policies, which increases as the policyholder ages

A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis? a) nondiscriminatory b) indemnity c) guarantee d) noncancellable

c) guarantee

which of the following is NOT true regarding a flexible spending account? a) it provides an opportunity to receive benefits on a pretax basis b) it is a cafeteria plan c) it does not have limits on contributions d) it operates on "use-it-or-lose-it rule"

c) it does not have limits on contributions A Flexible Spending Account is a special account you put money into that you use to pay for certain out-of-pocket health care costs. You don't pay taxes on this money. This means you'll save an amount equal to the taxes you would have paid on the money you set aside. - FSAs are limited to $2,750 per year per employer. If you're married, your spouse can put up to $2,750 in an FSA with their employer too. - You can use funds in your FSA to pay for certain medical and dental expenses for you, your spouse if you're married, and your dependents. - You can spend FSA funds to pay deductibles and copayments, but not for insurance premiums - You can spend FSA funds on prescription medications, as well as over-the-counter medicines with a doctor's prescription. - FSAs may also be used to cover costs of medical equipment like crutches, supplies like bandages, and diagnostic devices like blood sugar test kits

all of the following statements about the medicare part B are correct EXCEPT a) it is financed by monthly premium b) it is financed by tax revenues c) it is a compulsory program d) it covers services and supplies not covered by part A

c) it is a compulsory program part B is elective, individuals become eligible for part B at the same time they become eligible for part A, however part B requires that a monthly premium be paid

Concerning Medicare Part B, which statement is INCORRECT? a) it offers limited prescription drug coverage b) it provides partial coverage for medical expenses not fully covered by part A c) it is fully funded by social security taxes (FICA) d) it is known as medical insurance

c) it is fully funded by social security taxes (FICA) part B is funded by monthly premiums and from the general revenues of the federal government

what type of health insurance policy provides an employer with funds to train a replacement if a valued employee becomes disabled? a) disability buy-sell b) business overhead c) key person disability d) group disability

c) key person disability key person disability is purchased by the employer on the life of a key employee to cover the expense of hiring and training a replacement for the key person

when compared with the administrative cost found in individual coverage, the per capita administrative cost in group health insurance is a) comparable b) equal c) lower d) higher

c) lower

An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do? a) look at the applicant's medical history to decide what premium to charge b) send the applicant to a doctor for a physical. nothing can happen until they get the results c) offer the supplement policy on a guarantee issue basis d) exclude pre-existing conditions from coverage under the supplement policies

c) offer the supplement policy on a guarantee issue basis once a person becomes eligible for medicare supplement plans, and during the open enrollment period, coverage must be offered on a guaranteed issue basis

which of the following is NOT correct regarding false statements by a person engaged in the business of insurance? a) false statements about financial condition of an insurer are unlawful b) statements made with intent to deceive are unlawful c) only written statements can be considered fraud d) omissions of material fact on insurance application are fraud

c) only written statements can be considered fraud

Prior to purchasing a Medigap policy, a person must be enrolled in which of the following? a) any private insurance policy b) only part A of medicare c) parts A and B of medicare d) all four parts of medicare

c) parts A and B of medicare

according to the PPACA metal levels classification, if a health plan is expected to cover 90% of the cost for an average population, and the participants would cover the remaining 10%, what type of plan is that? A) silver b) gold c) platinum d) bronze

c) platinum metal level benefit plans pay % of expected health care costs: platinum 90% gold 80% silver 70% bronze 60%

which of the following is correct regarding the taxation of group medical expense premiums and benefits? a) premiums are not tax deductible and benefits are not taxed b) premiums are tax deductible and benefits are taxed c) premiums are tax deductible and benefits are not taxed d) premiums are not tax deductible and benefits are taxed

c) premiums are tax deductible and benefits are not taxed premiums paid by employers for group medical expense insurance are tax deductible for the employer as a business expense. also, policy benefits paid out to employees are not taxable as income to the employee

Rose bought three policies from the same insurer. Her benefits have exceeded the maximum allowed by the insurer. Which of the following will happen? a) termination of two of the policies b) termination of all of the policies c) pro rata benefit reduction d) full distribution of each policy's benefit

c) pro rata benefit reduction when an insured carries multiple policies from the same insurer and the benefits exceed the max allowed amount, the Other Insurance in this Insurer Provision provides for a pro rata benefit reduction and return of premium in order to prevent overinsurance

A producer has established a separate account for premiums collected on life insurance policies sold by the producer. Who is entitled to the interest earned on the deposits in the separate account? a) guaranty fund b) insurance fund c) producer d) policyowner

c) producer the separate account may be interest-bearing, and interest earned on the deposits held in the separate account may be retained by the producer

under which provision can a physician submit claim information prior to providing treatment? a) anticipatory treatment b) suspended treatment c) prospective review d) concurrent review

c) prospective review under the prospective review or pre-certification provision, the physician can submit claim info prior to providing treatment to know in advance if the procedure is covered under the insured's plan and at what rate it will be paid

which of the following dental insurance categories would cover the filling of cavities? a) this type of work is not covered b) routine and preventative maintenance c) routine and major restorative care d) orthodontic care

c) routine and major restorative care routine and major restorative care covers the cost of dental work, such as oral surgery, bridges, dentures, and cavity treatment. routine and preventative maintenance covers routine dental check-ups only

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a) survivorship insurance b) juvenile protection provision c) survivor protection d) life planning

c) survivor protection life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death aka survivor protection

The period of time immediately following a disability during which benefits are not payable is a) the grace period b) the blackout period c) the elimination period d) the probationary period

c) the elimination period the elimination period is a waiting period, expressed in days, not dollars, imposed on the insured from the onset of disability until benefit payments commence

in a group policy, the contract is between a) the employer and the union b) the employee and the employer c) the employer and the insurance company d) the individual and the insurance company

c) the employer and the insurance company

How are excess funds in an employee's health savings account (HSA) handled? a) the funds are applied toward the next years' deductible b) the funds are not taxed deductible c) the funds can be carried forward to the next year d) the funds are forfeited

c) the funds can be carried forward to the next year employer contributions are based on the difference in premium for a health insurance plan with a high deductible or standard deductible. the premium savings is kept in an HSA for the employee to pay for ongoing medical expense, with unexpended contributions carried forward year to year HRA vs HSA An HRA is an arrangement between an employer and an employee allowing employees to get reimbursed for their medical expenses (owned and funded by employer), while an HSA is a portable account that the employee owns and keeps with them even after they leave the organization

which of the following is NOT covered under Plan A in Medigap insurance? a) the 20% part B coinsurance amounts for medicare approved services b) the first 3 pints of blood each year c) the medicare part A deductible d) approved hospital costs for 365 additional days after medicare benefits end

c) the medicare part A deductible Medicare Supplement Plan A provides the core, or basic, benefits established by law. all of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans

what must happen when an individual policy or annuity has been delivered to the policyowner? a) the producer must go over the policy with the policyowner b) a notary public must witness the exchange c) the policyowner must sign a delivery receipt d) the policyowner must pay the annual premium in full

c) the policyowner must sign a delivery receipt when individual policy or annuity is delivered by hand to the policyowner, a delivery receipt must be signed. the receipt will be in duplicate and state the date the contract was received

which of the following is true regarding METs? a) they make deals with local hospitals to provide low cost coverage to the needy b) they provide insurance companies with medical information on applicants c) they allow several small employers purchase less expensive insurance together

c) they allow several small employers to purchase less expensive insurance together Multiple Employer Trust (MET ) is for small employers who cannot qualify for group health insurance band together for the purpose of buying insurance (ex: all of the florist in town get insurance together to cover their employee's)

how are employer contributions to health reimbursement accounts treated in regards to taxation? a) they are treated as income for the employer b) they are excluded from all taxation c) they are tax deductible d) they are taxed as a regular business expense

c) they are tax deductible

when employees are actively at work on the date coverage can be transferred to another insurance carrier, what happens to coinsurance and deductibles? a) coinsurance carriers over, but deductibles are generally higher b) deductibles carry over, but coinsurance is generally higher c) they carry over from the old plan to the new plan d) they have to be reevaluated

c) they carry over from the old plan to the new plan coinsurance and deductibles may be carried over from the old plan to the new plan. the purpose of coinsurance and deductible carryover provisions is to credit expenses incurred so as to not penalize the insured

what is the purpose of the rehabilitation benefit in disability insurance? a) to refund the insured's premium paid during the disability b) to help the insured recover from a disability c) to cover the expenses of retraining the insured to return to work d) to compensate the insured for the lost income

c) to cover the expenses of retraining the insured to return to work the rehab benefit will cover a portion of the cost for the insured to enroll in a retraining program to help the insured return to work after a disability

Why do group health providers usually require a certain amount of participation in the plan by eligible employees? a) to ensure a higher profit for the insurer b) to ensure the employer is being fair to employees c) to guard against adverse selection and reduce cost d) to promote preventive care

c) to guard against adverse selection and reduce cost the reason for the minimum participation requirement is to guard against adverse selection and to reduce administrative costs for the insurer Adverse selection is the phenomenon that bad risks are more likely than good risks to buy insurance. You want more healthy people with low risks to get covered, rather than bad risks.

what is the main purpose of the total disability plan? a) to provide benefits when the insured is unable to perform any of the duties of the occupation for which they are suited by education or training b) to pay additional monthly benefits to totally disabled individuals c) to protect individuals or families against the economic loss after a total disability of the wage earner

c) to protect individuals or families against the economic loss after a total disability of the wage earner

An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan? a) 1 month b) she would not receive any benefits c) 3 years d) 2 years

d) 2 years under an Own Occupation plan, if the insured cannot perform their current job for a period of up to two years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that two-year period. after that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid

what is the permitted maximum interest rate on the policy loans? a) 5% b) 6% c) 7% d) 8%

d) 8% there must be a provision that after 3 full years' premiums have been paid, the insurer will advance at any time at a fixed interest rate not exceeding 6% per year or variable rate not more than 8% per year

Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this? a) a stunt person pays a low premium and receives a superior classification of disability b) an attorney pays a higher premium and receives a poorer class of disability c) a secretary pays a higher premium and receives superior class of disability d) a construction worker pays a higher premium and receives a poorer classification of disability

d) a construction worker pays a higher premium and receives a poorer classification of disability

employers can reduce health plan costs by coupling a health reimbursement account (HRA) with a) a low deductible health plan b) an IRA c) nothing; HRAs cannot be coupled with any other health plan d) a high deductible health plan

d) a high deductible health plan HRAs permit an employer to reduce health plan costs by coupling the HRA with a high-deductible (and usually lower-cost) health plan - HRAs are a health benefit plan that reimburses employees for out-of-pocket medical expenses and individual health insurance premiums - Some employers offer HRAs to complement a high-deductible health plan (HDHP) - HRAs are fully owned and funded by the employer - Unused HRA money stays with the company - HRA money can be used to pay for family medical expenses

the free-look provision allows for which of the following? a) immediate coverage when the application is submitted b) a guarantee that the policy will not lapse if the premium is overdue c) a guarantee that the policy will be issued d) a right to return the policy for a full premium refund

d) a right to return the policy for a full premium refund

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain a) a statement from the insured's employer showing that the insured was unable to work b) an estimate of the total amount of medical and hospital expense for the loss c) a complete physician's statement d) a statement that is sufficiently clear to identify the insured and the nature of the claim

d) a statement that is sufficiently clear to identify the insured and the nature of the claim the insurance code requires that each policy must include, "written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible".

under a key person disability income policy, premium payments a) are made by the employee and are not tax-deductible b) are made by the employee and are tax-free c) are made by the business and are tax-deductible d) are made by the business and are not tax-deductible

d) are made by the business and are not tax-deductible premiums are nondeductible to the business, however, benefits are received tax-free by the business

an individual is insured under his employer's group Disability Income policy. the insured suffered an accident while on vacation that left him unable to work for 4 months. if the disability income policy pays the benefit, which of the following would be true? a) the insured has to wait 2 more months to start receiving the benefits b) for the business, payments are not considered tax deductible as an ordinary business expense c) the insured can deduct his medical expense benefits from his income tax d) benefits that are attributable to employer contributions are fully taxable to the employee as income

d) benefits that are attributable to employer contributions are fully taxable to the employee as income group disability income premium payments are considered tax deductible by the business as an ordinary business expense. in a plan funded entirely by the employer, income benefits are included in the employee's gross income and taxed as ordinary income

which of the following options best depicts how the eligibility of members for group health insurance is determined? a) eligibility is not determined, but simply accepted b) by the physical conditions of the applicants at the time of employment c) in such a manner as to establish individual selection as to the amounts of insurance d) by conditions of employment

d) by conditions of employment the individual employer normally must provide insurance coverage to all full-time employees. the employer can specify within some limitations how many hours are considered full time, and whether both salaried and hourly employees will be covered. the employer can also legally exclude a particular group of employees from the eligible class of employees

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? a) legal purpose b) contract of adhesion c) acceptance d) consideration

d) consideration

which of the following reports will provide the underwriter with the information about an insurance applicants credit? a) inspection report b) agents c) any federal d) consumer report

d) consumer report Consumer reports include written and/or information regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources

which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a) underwriting b) twisting c) slandering d) defamation

d) defamation

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? a) benefits received by the employee are free from federal income tax b) premiums paid by the employer are deductible as a business expense c) employee paid premiums may be deducted if certain conditions are met d) employee benefits are tax deductible the year in which they were received

d) employee benefits are tax deductible the year in which they were received for group medical and dental expense insurance any premium paid by the employer is deductible as a business expense. however, any premiums provided by the employee are only deductible if certain conditions are met. group medical and dental expense benefits are received income tax free by the employee

An insured is involved in an accident that renders him permanently deaf, although he does not sustain any other major injuries. The insured is still able to perform his current job. To what extent will he receive Presumptive Disability benefits? a) partial benefits b) full benefits for 2 years c) no benefits d) full benefits

d) full benefits presumptive disability plans offer full benefits for specified conditions. these policies typically require the loss of at least two limbs (loss of use does not qualify in some policies), total and permanent blindness, or loss of speech or hearing. benefits are paid, even if the insured is able to work Presumptive disability insurance pays full disability insurance benefits if you receive a disability so severe that total disability can be presumed

health savings accounts (HSAs) are designed to a) increase individual interest income b) insure against catastrophic losses c) provide duplicate coverage for health care expenses d) help individual save for qualified health expenses

d) help individual save for qualified health expenses HSAs help individuals save for qualified out-of-pocket health care expenses such as the deductible expense from a high deductible health plan

which statement regarding insurable risks is NOT correct? a) insurance cannot be mandatory b) the insurable risk needs to be statistically predictable c) an insurable risk must involve a loss that is definite as to cause, time, place, and amount d) insureds cannot be randomly selected

d) insureds cannot be randomly selected - granting insurance must not be mandatory - selecting insureds randomly will help the insurer have a fair proportion of good risks to poor risks

what is the benefit of choosing extended term as a nonforfeiture option? a) it matures at age 100 b) it allows for coverage to a fixed annuity c) it can be converted to a fixed annuity d) it has the highest amount of insurance protection

d) it has the highest amount of insurance protection under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. the duration of the new term, coverage lasts for as long a period as the amount of cash value will purchase

which is true regarding HMO (Health Maintenance Org) coverage? a) it is divided based on the average tax bracket of a family b) it is divided by state c) HMOs provide nationwide coverage d) it is divided into geographic territories

d) it is divided into geographic territories HMOs offer services to those living within specific geographic boundaries that may be formed by county lines or city limits. if one lives within the boundaries, they are eligible to belong to the HMO, but if they do not live within the boundaries, they are ineligible - lower premiums than PPO, pay less out of pocket

which of the following statements is NOT correct concerning the COBRA Act of 1985? a) it covers terminated employees and/or their dependents for up to 36 months after a qualifying event b) it applies only to employers with 20 or more employees that maintain group health insurance plans for employees c) COBRA stands for consolidated omnibus budget reconciliation act d) it requires all employers, regardless of the number or age of employees, to provide extended group health coverage

d) it requires all employers, regardless of the number or age of employees, to provide extended group health coverage COBRA Act applies to only employers with 20 or more employees

which of the following settlement options in life insurance is known as straight life? a) single life b) life with period certain c) fixed amount d) life income

d) life income the life-income option, aka straight life, provides the recipient with an income that they cannot outlive. it pays the benefit while the ben is alive; however, the payments stop at the ben's death

when an applicant purchased a life insurance policy, the agent dated the application 4 months prior. when asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would a) shorten the contestability period b) eliminate pre-existing conditions c) help him meet a sales quota for that period d) lower the insured's premium

d) lower the insured's premium

insurance commissioner is empowered by the Washington insurance code to perform all of the following duties EXCEPT a) investigate the business practices of insurers b) levy fines against insurers found in violation of the insurance code c) revoke the appointment of a deputy d) make revisions to the insurance code

d) make revisions to the insurance code

which of the following information regarding an insured is NOT included in an Investigative Consumer Report, which is requested by an underwriter? a) applicant's character b) personal habits c) general reputation d) medical history

d) medical history investigative consumer report is considered to be part of an insurance applicant. this report is used in the underwriting process in order to assess non-medical risk factors related to moral standing and avocations. friends and colleagues are interviewed in order to evaluate the applicant's character, reputation, and habits. the applicant must be informed in writing if the insurer decides to conduct the investigation

a producer is selling a client a Variable Life insurance policy and as an inducement shows the client a projection based upon shares or dividends paid on similar policy. this is a) twisting b) defamation c) unacceptable business practice d) misrepresentation

d) misrepresentation this is a misrepresentation and a violation of insurance regulations defined by the insurance code

under the fair credit reporting act, individuals rejected for insurance due to information contained in a consumer report a) are entitled to obtain a copy of the report from the party who ordered it b) must be advised that a copy of the report is available to anyone who requests it c) may sue the reporting agency in order to get inaccurate data corrected d) must be informed of the source of the report

d) must be informed of the source of the report under the Fair Credit Reporting Act, if an insurance policy is declined or modified bc of information contained in a consumer report, the consumer must be advised and provided with the name and address of the reporting agency

an insured involved in a car accident and it is determined to be her fault, the police give her a breathalyzer test to determine whether or not she had been drinking alcohol before the accident. her blood alcohol level is over the legal limit. what type of health benefits will her health insurance policy pay for her injuries if the policy includes the narcotics and intoxicants provision? a) only post-hospitalization benefits b) full benefits c) partial benefits d) no benefits

d) no benefits the narcotics & intoxicants provision stipulates that the insurer will not cover any injury or illness resulting from intoxication created by drugs or alcohol. treatment for substance abuse is typically still covered under most policies. this provision is geared specifically toward injuries and illnesses resulting from substance abuse

an insured's health claim internal appeal was denied. the insurer must do all of the following EXCEPT a) notify the insured about the decision in writing b) complete the appeal in 60 days after service was received c) notify the insured how to obtain an outside review d) offer a payment plan

d) offer a payment plan internal appeals must be completed within 30 days for pre-service claim and within 60 days if services have already been received. the insurer must provide a written decision whether the claim is paid or denied and, if denied, the insurer must tell the insured how to file a request for an external review

which of the following is correct regarding the taxation of group medical expense premiums and benefits? a) premiums are not tax deductible and benefits are taxed b) premiums are not tax deductible and benefits are not taxed c) premiums are tax deductible and benefits are taxed d) premiums are tax deductible and benefits are not taxed

d) premiums are tax deductible and benefits are not taxed premiums paid by employers for Group Medical Expense insurance are tax deductible for the employer as a business expense. also, policy benefits paid out to employees are not taxable as income to the employee

Pertaining to insurance, what is the definition of a fiduciary responsibility? a) helping insureds to file claims b) performing reviews of insured's coverage c) offering additional coverage to clients d) promptly forwarding premiums to the insurance company

d) promptly forwarding premiums to the insurance company fiduciary refers to position of trust. when an agent is handing the premiums that belong to an insurance company, they are acting in a fiduciary capacity.

what would a physician utilize if they wanted to know if a treatment is covered under an insured's plan and at what rate it will be paid? a) concurrent review b) comprehensive review c) supplementary chart d) prospective review

d) prospective review

When the insured initiates the cancellation of a policy, the unearned premium will be refunded on a a) extended term basis b) pro rata basis c) per occurrence basis d) short rate basis

d) short rate basis when a policy is cancelled at the insured's request, the amount of returned unearned premium will be calculated on the short rate table that the insurer has filed with the insurance department. this allows the insurer to retain some of its cost of issuing the policy and providing service it is a disincentive for the insured to cancel the policy before its normal expiration date

your client wants to know what the tax implications are for the contributions to a HSA (health savings account). you should advise her that the contributions are a) subject to personal income taxes b) post-tax dollars c) subject to capital gains taxes d) tax deductible

d) tax deductible contributions to HSAs by individuals are deductible, even if the taxpayer does not itemize*. contributions by an employer are not included in the individual's taxable income Contributions reduce taxable income, their growth within the account is tax-free, and qualified withdrawals (ones used for medical expenses) are also tax-free. However, if you have enough medical expenses not paid with the HSA you may be able to claim them as an itemized deduction. In order to itemize, deductible expenses must be more than 7.5% of your adjusted gross income (AGI).

which of the following information will be stated in the consideration clause of a life insurance policy? a) the parties to the contracts b) the time period allowed for the payment of premium c) the conditions for insurability d) the amount of premium payment

d) the amount of premium payment the consideration clause states that the value offered by the insured is the premium and statements made in the application, so it will include the information about the amount and frequency of premium payments

An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy? a) the principal amount in a lump sum b) the capital amount in monthly installments c) the principal amount in monthly installments d) the capital amount in a lump sum

d) the capital amount in a lump sum AD&D policies pay a capital amount (a % of the principal amount) for the loss of one limb or loss of sight in one eye. the principal amount is paid for death or often for the loss of 2 limbs or loss of sight in both eyes. benefits are paid in lump sum.

which of the following is true regarding a waiver of a surrender charge on an annuity contract? a) the charge can only be waived if the annuitant needs the funds for medical expenses b) the surrender charge will be applied to all premature surrenders c) the surrender charge waiver only applies to immediate annuity d) the charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days

d) the charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days

When Linda suffered a broken hip, she notified her agent, in writing, within 12 days of the loss. However, her agent did not notify the insurance company until 60 days after the loss. Which of the following statements correctly explains how this claim would be handled? a) the insurer may delay the payment of this claim for up to 6 months b) the insurer may settle this claim for less than it otherwise would have had the notification been provided in a timely manner c) the insurer may deny the claim since it was not within the required 20-day time frame d) the insurer is considered to be notified since the notification to agent equals notification to the insurer

d) the insurer is considered to be notified since the notification to agent equals notification to the insurer

all of the following statements about Medicare supplement insurance policies are correct EXCEPT a) they cover medicare deductibles and copayments b) they supplement medicare benefits c) they are issued by private insurers d) they cover the cost of extended nursing home care

d) they cover the cost of extended nursing home care medicare supplement policies (medigap) do not cover the cost of extended nursing home care. medigap plans are designed to fill the gap in coverage attributable to medicare's deductibles, copayment requirements, and benefit periods. these plans are issued by private insurance companies

which of the following is the best reason to purchase life insurance rather than annuities? a) to liquidate a sum of money over a period of years b) to create regular income payments c) to liquidate a sum of money over a lifetime d) to create an estate

d) to create an estate the death benefit creates an immediate estate should the insured die

When is the insurability conditional receipt given? a) after the application has been approved and the premium has been paid b) when an insured individual needs to obtain an insurability receipt for tax purposes c) if the application is approved before the premium is paid d) when the premium is paid at the time of application

d) when the premium is paid at the time of application under the terms of the insurability conditional receipt, the insurance coverage becomes effective as the date of the receipt, provided application is approved. this receipt is generally provided to the applicant when the initial premium is paid at the time application

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? a) as soon as possible b) within 20 days c) within 60 days d) within 90 days or as soon as reasonably possible, but not to exceed 1 year

d) within 90 days or as soon as reasonably possible, but not to exceed 1 year the "proof of loss" provisions states the claimant must submit a proof of loss within 90 days; however, if is not possible to comply, the time parameter is extended to 1 year. the one-year limit does not apply if the claimant is not legally competent to comply with this provision

how many pints of blood will be paid for by medicare supplement core benefits?

first 3 medicare supplemental policies cover costs if deductibles and coinsurance for Parts A and B. since medicare will not pay for the first 3 pints of blood, a medicare supplement plan will cover that. this is considered to be core benefit

a universal life insurance policy is best described as a) annually renewable term policy with a cash value account b) variable life with a cash value account c) flexible premium variable life policy

a) annually renewable term policy with a cash value account a universal policy has two components: an insurance component and a cash account. the insurance component (or the death protection) of a universal life policy is always annual renewable term insurance

which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a) automatic premium loan b) extended term c) reinstatement d) reduced paid-up option

a) automatic premium loan automatic premium loan provision is not required, but is commonly added to contracts with a cash value at no additional charge. this is special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium

which of the following terms is used to name the nontaxed return of unused premiums? a) dividend b) premium return c) interest d) surrender

a) dividend the return of unused premiums is called a dividend. dividends are not considered to be income for tax purposes, since they are the return of unused premiums

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n) a) equity indexed annuity b) variable annuity c) flexible annuity d) immediate annuity

a) equity indexed annuity An equity-indexed annuity is a fixed annuity where the rate of interest is linked to the returns of a stock index, such as the S&P 500. - Equity-indexed annuities may appeal to moderately conservative investors. - Equity-indexed annuities are relatively complex investments, not appropriate for novice or unsophisticated investors. - There are cons to consider, such as high fees and commissions that are often associated with them - Earnings from equity-indexed annuities are slightly higher than traditional fixed-rate annuities, lower than variable-rate annuities, but with better downside risk protection than variable annuities

what is the term used for an applicant's written request to an insurer for the company to issue a contract, based on the information provided? a) insurance request form b) request for insurance c) application d) policy request

c) application an individual can submit an application to an insurer, which requests that the insurer review the information and issue an insurance contract

in life insurance policies, cash value increases a) grow tax deferred b) are income taxable immediately c) are taxed annually d) are only taxed when the owner reaches 65

a) grow tax deferred life insurance cash values are only income taxed if the policy is surrendered (totally or partially) and the cash value exceeds the premiums paid Tax-deferred growth is investment growth that's not subject to taxes immediately, but is instead taxed down the line - ex: retirement plans

Life income joint and survivor settlement option guarantees a) income for 2 or more recipients until they die b) payment of interest on death proceeds c) payout of the entire death benefits d) equal payments to all recipients

a) income for 2 or more recipients until they die the life income joint and survivor options guarantees an income for two or more recipients for the duration of their lives. most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. there is no guarantee that all the life insurance proceeds will be paid out

which document is used to assess risk associated with an applicant's lifestyle and character? a) investigative consumer report b) character assessment c) non-medical risk assessment d) applicant lifestyle assessment

a) investigative consumer report an Investigative Consumer Report is considered to be part of an insurance application. this report is used in the underwriting process in order to assess non-medical risk factors related to moral standing and avocations. friends and colleagues are interviewed in order to evaluate the applicant's character, reputation, and habits. the applicant must be informed in writing if the insurer decides to conduct the investigation

The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called a) life income with period certain b) life income with refund c) joint and survivorship

a) life income with period certain if the annuitant dies before the period certain, the payments continue to a beneficiary or the estate for the remainder of the period certain

which of the following statements is TRUE concerning whole life insurance? a) lump-sum death benefits are not taxable b) dividend interest is not taxable c) premiums are tax deductible

a) lump-sum death benefits are not taxable dividend interest is taxable; policy loans are not tax deductible, and premiums are not tax deductible

an insured committed suicide 6 months after his life insurance policy was issued. the insurer will a) refund the premiums paid b) pay the policy's cash value c) pay the full death benefit to the ben d) pay nothing

a) refund the premiums paid

when benefits are paid directly to the insured under a health insurance policy, the policy provides benefits on what type of basis? a) reimbursement b) service c) limited d) scheduled

a) reimbursement the insured is responsible to pay the provider, and the policy reimburses the insured for covered expenses

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? a) the annuitant must be a natural person b) a corp can be an annuitant as long as their the owner c) "" as long as the beneficiary is a natural person d) the contract can be issued without an annuitant

a) the annuitant must be a natural person

which of the following is true regarding taxation benefits under a life insurance policy? a) they are tax free to terminally ill insured b) they are always taxable to chronically ill insured c) they are always taxed d) there is a 10% penalty for early distribution of the DB

a) they are tax free to terminally ill insured when accelerated benefits are paid under a life insurance policy, they are received tax free by terminally ill insured, and tax free up to a limit for chronically ill insured

at age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. which of the following policies would most likely fit his needs?

adjustable life adjustable life policies allow for increases or decreases in the face amount or premium, so long as the premium is sufficient to pay for the mortality. any increase in face amount requires proof insurability

which of the following types of agent authority is also called "perceived authority"?

apparent apparent/perceived authority is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created

an individual has been diagnosed with Alzheimer's disease. he is insured under a life insurance policy with the accelerated benefits rider. which of the following is true regarding taxation of the accelerated benefits? a) the entire living benefit is considered taxable income b) a portion of the benefit up to a limit is tax free; the rest is taxable income c) principal is tax free, but interest is taxed

b) a portion of the benefit up to a limit is tax free; the rest is taxable income when accelerated benefits are paid to chronically ill insured, they are tax free up to a certain limit. any amount received in excess of this dollar limit must be included in the insured's gross income terminally ill insured's benefits are completely tax free

according to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following? a) full premium refund without any charges b) guaranteed surrender value c) no payments

b) guaranteed surrender value Definition: The guaranteed surrender value is the amount guaranteed to the policy holder in case of voluntary termination of the policy by the policy holder before maturity. - calculated after surrender charges

what type of insurance would be used for a return of premium rider? a) annually renewable term b) increasing term c) level term d) decreasing

b) increasing term The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary

all of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT a) the insurer determines the amount for each payment b) it is a life contingency option c) it will pay the benefit only for a designated period of time d) the payments are not guaranteed for life

b) it is a life contingency option under the installments for a fixed period annuity settlement option, the annuitant selects the time period for the benefits; the insurer determines how much each payment will be. this option pays for specific amount of time only, and there are no life contingencies A life contingency option is an annuity payout option that provides a death benefit in case the annuitant dies during the accumulation stage.

an insured has a life insurance policy that requires him to only pay premiums for specified number of years until the policy is paid up. What kind of policy is it? a) graded premium life b) limited-pay life c) variable life d) adjustable life

b) limited-pay life in limited-pay policies, the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years

which of the following statements is TRUE concerning whole life insurance? a) policy loans are tax deductible b) lump-sum death benefits are not taxable c) dividend interest is not taxable d) premiums are tax deductible

b) lump-sum death benefits are not taxable dividend interest is taxable; policy loans and premiums are not tax deductible Tax deductible: A tax deduction is an expense that you had that the government allows you to subtract from your total taxable income, making your total taxes owed smaller

which of the following do the standard and preferred risk categories share? a) permanent coverage b) premiums are not elevated c) more medical evaluations are required

b) premiums are not elevated the "standard" rating indicates that an individual represents a similar level of health and lifestyle quality as other members of the same age cohort. these individuals do not need special policy restrictions or are required to pay higher premiums. those in the "preferred" category often have to pay smaller premiums than those who are in the "standard" category

in which of the following instances would the premium be tax deductible? a) premiums paid by an employer on the life of key person b) premiums paid by an employer on a $30,000 group term life insurance plan for employees c) premiums paid by an individual on their own life insurance

b) premiums paid by an employer on a $30,000 group term life insurance plan for employees as a general rule, premiums paid for life insurance are not tax deductible. the exception to this rule is when an employer buys group term life insurance for his employees since it is considered a business expense

The risk of loss may be classified as a) high risk and low risk b) pure risk and speculative risk c) certain risk and uncertain risk

b) pure risk and speculative risk pure risks involve the probability or possibility of loss w no chance of gain; generally insurable. speculative risks involve uncertainty as to whether the final outcome will be gain or loss; uninsurable

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy. a) decreased death benefit at each renewal b) required a premium increase each renewal c) built cash values d) required proof of insurability every year

b) required a premium increase each renewal annually renewable term policies' premiums are adjusted each year to the insured's attained age; however, the policy may be guaranteed renewable. death benefits remain level, and as with any term policy, there are no cash values

which of the following components of dental insurance does NOT require the payment of a deductible? a) cosmetic dentistry b) routine and preventive maintenance c) routine and major restorative care d) orthodontic care

b) routine and preventive maintenance routine and preventive maintenance does not require the payment of an annual premium or coinsurance, unlike the other two types, which both require deductible payment. insurers typically do not charge an annual premium or coinsurance in order to provide an incentive for preventive care

a domestic insurer issuing variable contracts must establish one or more a) general accounts b) separate accounts c) liability accounts d) annuity accounts

b) separate accounts any domestic insurer issuing variable contracts must establish one or more separate accounts. the insurer must maintain in each separate account assets with a value at least equal to the reserves and other contract liabilities connected to the account

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a a) rollover b) settlement option c) nontaxable exchange

b) settlement option a settlement option is exercised when an immediate annuity is purchased with the face amount at death or with the cash value at surrender An immediate annuity is the most basic type of annuity. You make one lump-sum contribution. It's converted into an ongoing, guaranteed stream of income for a specified period of time (as few as five years) or for a lifetime. Withdrawals may begin within a year Immediate vs Deferred Annuity: An immediate annuity begins paying out as soon as the buyer makes a lump-sum payment to the insurer. A deferred annuity begins payments on a future date set by the buyer.

after three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. the insurer returns all the premium payments to the owner, except for a predetermined percentage. what is this percentage called? a) inflation adjustment b) surrender charge c) termination penalty d) bail-out charge

b) surrender charge if a deferred annuity is surrendered prematurely, a surrender charge is imposed. the charge is generally a percentage that reduces over time until it ends

all of the following are true about variable products EXCEPT a) policyowners bear the investment risk b) the premiums are invested in the insurer's general account c) the minimum death benefit is guaranteed d) the cash value is not guaranteed

b) the premiums are invested in the insurer's general account insurer's selling variable products invest their customer's monies in a separate account, which is very similiar to a mutual fund. since there is no guaranteed rate of return, customers must bear the investment risk.

in an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT a) the amount of insurance b) the type of investment c) the length of coverage d) the premium

b) the type of investment typically, the owner of an adjustable life policy has the following privileges: increasing or decreasing the premium, changing the premium-paying period, increasing or decreasing the face amount of coverage, or changing the period of protection

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? a) $20,000 b) $25,000 c) $50,000 d) the face amount will be determined by the insurer

c) $50,000 the face of the term policy would be the same as the face amount provided under the whole life policy The nonforfeiture extended term option allows the policy owner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy. The policy is calculated from the insured's attained age. Extended-term insurance is often the default non-forfeiture option. With extended term insurance, the face amount of the policy stays the same, but it is flipped to an extended-term insurance policy. Meanwhile, the equity you built is used to purchase a term policy that equals the number of years you paid premiums

what type of life insurance is most commonly used for group plans? a) flexible premium whole life b) decreasing term c) annually renewable term d) whole life

c) annually renewable term

which of the following is true regarding taxation of dividends in participating policies? a) dividends are taxable only after a certain amount is accumulated annually b) dividends are not considered income for tax purposes c) dividends are not taxable

c) dividends are not taxable dividends are not considered to be income for tax purposes, since they are the return of unused premiums. the interest earned on the dividends, however, is subject to taxation as ordinary income

Which policy component decreases in decreasing term insurance? a) dividend b) premium c) face amount d) cash value

c) face amount decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term Face Amount vs Cash Value The face amount is the death benefit. This is the dollar amount that the policy owner's beneficiaries will receive upon the death of the insured. The cash value is the amount you would receive if you surrendered the policy early, forfeiting the death benefit in return for cash up front

the life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the a) insuring clause b) misstatement of age clause c) incontestability clause d) reinstatement clause

c) incontestability clause if an insurer wishes to contest any statements on an application, they must do so within the first 2 years

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? a) single life b) fixed-amount c) life income with period certain d) joint and survivor

c) life income with period certain

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a a) endowment b) nonqualified c) modified endowment contract d) accelerated benefit policy

c) modified endowment contract any cash value life insurance policy that develops cash value faster than seven-pay whole life contract is called a MEC. it loses the benefits of a standard life contract - changes tax structure/qualifications What happens when a policy becomes a modified endowment contract? A: When a permanent life insurance policy becomes an MEC, you can no longer make tax-free withdrawals from the cash value. Before age 59 ½ you'll pay taxes and a 10% fee to access your money.

the following are features of the Indexed Universal Life EXCEPT a) adjustable death benefit b) policy's cash value is dependent on the performance of the equity index c) sale of this product requires a securities license d) flexible premium

c) sale of this product requires a securities license Indexed Universal Life policies have some of the same features as the UL: flexible premiums, adjustable death benefits, and an investment. However, the policy's cash value is dependent upon the performance of the equity index. Sale of the Indexed Universal Life products does not require a securities license

which type of life insurance policy generates immediate cash value? a) decreasing term b) continuous premium c) single premium d) level term

c) single premium like other types of whole life policies, Single Premium Whole Life (SPWL) endows for the face amount of the policy if the insured lives until the age of 100. The distinguishing feature of a SPWL is the fact that it generates immediate cash value, due to the lump-sum payment made to the insurer.

in a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment? a) the annuitant will receive the lower of either the guaranteed min rate or current rate b) the annuitant will only receive the guaranteed min specified in the contract c) the annuitant will receive the higher of either the guaranteed min rate or current rate d) the annuitant will always receive the current interest rate

c) the annuitant will receive the higher of either the guaranteed min rate or current rate with a fixed annuity, the insurer invests the principal and gives the annuitant a guaranteed interest rate based on a min rate specified in the annuity, or current interest rate, whichever is higher A fixed annuity is a type of insurance contract that promises to pay the buyer a specific, guaranteed interest rate on their contributions to the account. By contrast, a variable annuity pays interest that can fluctuate based on the performance of an investment portfolio chosen by the account's owner

which of the following is NOT a characteristic of an insurable risk? a) the loss must be measurable b) the loss expose must be large c) the loss must be catastrophic d) the loss must be due to chance

c) the loss must be catastrophic in order to be characterized as pure risk, the loss must be due to chance, definite, measurable, and predictable, but not catastrophic

which of the following determines the cash value of a variable life policy? a) the policy's guarantees b) the premium mode c) the performance of the policy portfolio d) the company's general account

c) the performance of the policy portfolio the cash value of a variable life policy is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer.

which is true about a spouse term rider? a) the rider is decreasing term insurance b) coverage is allowed up to age 75 c) the rider is usually level term insurance d) coverage is allowed for an unlimited time

c) the rider is usually level term insurance the spouse term rider allows a spouse to be added for coverage. it is available for a limited amount of time, typically expiring at age 65. a spouse term rider (just like any other insured rider) is usually level term insurance

What kind of policy allows withdrawals or partial surrenders? a) term policy b) variable whole life c) universal life d) 20-pay life

c) universal life UL allow the partial withdrawal, or surrender, of the policy cash value Term policies do not have a cash value option

which of the following products requires a securities license? a) equity indexed annuity b) deferred annuity c) variable annuity d) fixed annuity

c) variable annuity a variable annuity is considered to be security and is regulated by the Securities Exchange Commission (SEC) in addition to state insurance regulations. for that reason, a person must hold a securities license in addition to a life agent's license in order to sell variable annuities

which of the following is NOT allowed in credit life insurance? a) creditor having a collateral assignment on the policy b) creditor requiring that a debtor buys insurance from a certain insurer c) creditor requiring that a debtor has a life insurance

creditor requiring that a debtor buys insurance from a certain insurer in credit life insurance, a creditor may require that the debtor have life insurance, but they cannot require the debtor to purchase insurance through a specific insurer

the insured is also the policyowner of a whole life policy. what age must the insured attain in order to receive the policy's face amount? a) 65 b) 70.5 c) 90 d) 100

d) 100 whole life insurance policies mature when the insured reaches the age 100. the cash value at that time is scheduled to equal the face amount; therefore, when the insurance company pays the face amount, which in turns pays the cash value

a person who does not lock the doors or does not repair leaks shows an indifferent attitude. this person presents what type of hazard?

morale careless/irresponsible bc they have insurance

the annuity owner dies during the accumulation period without naming a ben. annuity's cash value exceeds premiums paid. which of the following is TRUE? a) premium value will be paid to the annuitant's estate b) all benefits will be forfeited c) cash value will be paid to the state government d) cash value will be paid to the annuitant's estate

d) cash value will be paid to the annuitant's estate

a long stretch of national economic hardship causes a 7% rate of inflation. a policyowner notices that the face value of her life insurance policy has been raised 7% as a result. which policy rider caused this change? a) value adjustment rider b) return of premium rider c) inflation rider d) cost of living rider

d) cost of living rider the cost of living rider annually adjusts the policy's face value in accordance with the national rate of inflation or deflation. this rider adjusts the face amount of the policy to correspond with the rate of inflation, in order to keep the initial value of the constant over time.

which of the following are NOT fundable by annuities? a) cash accumulation for any reason b) a persons retirement c) estate liquidation d) death benefits

d) death benefits annuities are most commonly used to fund a persons retirement, but they can technically be used to accumulate cash for any reason. annuities can also be used to liquidate an estate. annuities do not provide death benefits; those are provided by life insurance

all of the following statements concerning dividends are true EXCEPT a) lower insurance company costs generate higher dividends b) they stem from favorable underwriting experience c) favorable investment results generate higher dividends d) dividend amounts are guaranteed in the policy

d) dividend amounts are guaranteed in the policy Dividends: - lower insurance company costs generate higher dividends; - they stem from favorable underwriting experience; - favorable investment results generate higher dividends

which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? a) it is a life contingency option b) the ben receives the remainder of the principal amount upon the annuitant's death c) payments can be made in installments and as a single cash refund d) it does not guarantee that the entire principal amount will be paid out

d) it does not guarantee that the entire principal amount will be paid out with the life w/ guaranteed minimum annuity settlement option, if the annuitant dies before the principal amount (the amount paid into the annuity) has been paid out, the remainder will be refunded to their beneficiary. pure life provides the highest monthly benefit for an individual annuitant

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? a) is is not considered to be taxable b) it is taxable only if it exceeds the amount paid for premiums by 50% c) it is automatically taxable d) it is only if the cash value exceeds the amount paid for premiums

d) it is only if the cash value exceeds the amount paid for premiums

An insurer wishes to compare the information given in an insurance application with previous insurance applications by the same applicant but for different companies. What organization can help the insurer accomplish this? a) the state department of insurance b) social security c) the national ass of insurance commissioners d) the medical information bureau

d) the medical information bureau members of the MIB can request a report on an applicant and receive coded information from any other applications for insurance submitted to other MIB members

which of the following life insurance policies would be considered interest sensitive? a) adjustable life b) whole life c) increasing term d) universal life

d) universal life as well as being a flexible premium policy, universal life is also an interest-sensitive policy. the insurer credits the cash value in the policy with a current (non-guaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest

which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? a) distributions before age 59.5 incur 10% penalty on policy gains b) policy loans are taxable distributions c) accumulations are tax deferred d) withdrawals are not taxable

d) withdrawals are not taxable any distribution from MECs are taxable, including withdrawals and policy loans

The authority granted to an agent through the agent's contract is referred to as

express authority

the requirement that agents not commingle insurance monies with their own funds is known as

fiduciary responsibility

an insured buys a 5-level premium term policy with a face amount of $10,000. the policy also contains renewability and convertibility options. when the insured renews the policy in 5 years, what will happen to the premium? a) it will increase each year during the next 5 years as the face amount increases each year b) it will increase bc the insured will be 5 years older than when the policy was originally purchased c) it will remain the same for the 5-year term

it will increase bc the insured will be 5 years older than when the policy was originally purchased

an insured purchased a life policy in 2010 and died in 2017. the insurance company discovers at that time that the insured had concealed information during the application process. what can they do?

pay the death benefit the incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years, even on the basis of a material misstatement of facts or concealment of a material fact