GA: Life Insurance

Carla owns a $100,000 Life policy with a $50,000 AD&D Rider. She is hit by a train while jogging and her foot is severed. While she is in the hospital, she contracts an infection and dies five weeks later. The Insurer will pay:

$150,000

Group life paid for by the employer is tax deductible for the employer. The premium is not considered to be taxable income for the employee unless the amount of the death benefit exceeds:

$50,000.

Mika has a $4,800 medical expense claim. She has a medical expense policy with a $2,000 deductible, and an 80/20 coinsurance clause. Assume that Mika has already satisfied the deductible for the year. What is the amount of her $4,800 claim will she be responsible for paying?

$960

If a 30-year old will live to age 99, which of the following policies will pay a death benefit and will have cost the lowest total premium outlay?

15-Pay Whole Life

The Free Look provision under Long Term Care is:

30 days

A and B have a baby. The baby is covered from the moment of birth. However, to have continued coverage for the baby, A and B must notify the Insurer of the child's birth within how many days?

31 days

What is the standard grace period for Life Insurance policies?

31 days

Which of the following is most likely to be the grace period for a Health Insurance policy?

31 days

Under Social Security, one who is Fully Insured has worked and contributed to FICA for at least:

40 quarters.

How long is the pre-existing condition time limit in a Long Term Care policy?

6 months back, 6 months forward

COBRA provides for continuation if the request is made during the Election Period of:

60 days

Mrs. M has a $100,000 life annuity. Her annuity guarantees that if she dies before the $100,000 has been fully paid to her, the balance will be paid to her designated beneficiary in a single payment. This is an example of:

A Cash Refund Life Annuity

Mandy (age 25) is interested in having Life Insurance in force when she dies, but she doesn't want to have to pay premiums when she's retired. What would you recommend?

A Limited Pay Whole Life policy

Each of the following Annuity payout options may continue to pay a benefit to a surviving spouse EXCEPT:

A Straight Life Annuity.

Which of the following automatically must cover all employees?

A non-contributory group policy.

Paul has a Group Health plan at work. His employer pays the whole premium and Paul does not have to pay anything for the coverage. What is this type of plan called?

A noncontributory plan.

Which of the following best describes an Adjustable Life policy?

A policy that may have Whole Life, Term Life, or a combination of the two and has a changeable death benefit.

Q submitted a life insurance application for her young daughter who has a history of heart problems. Q neglected to mention the heart problems in the application. The daughter died of the heart condition 18 months after the policy was delivered. The Insurer will probably:

Adjust the death benefit to the amount that would have been paid had the Insurer known of the heart condition.

Which of the following professionals would be LEAST likely to purchase a Business Overhead Expense Policy?

An architect working for a major corporation.

Who can make changes to an insurance policy?

An executive officer of the insurance company.

The premium mode which results in the greatest cost savings over the life of the policy is:

Annual Premium

Which of the following provides the beneficiary with periodic income payments for the life of the beneficiary?

Annuity Settlement Option

Which of the following provisions is optional and cannot be included without the policy owner's consent?

Automatic Premium Loan Provision

Indemnity means:

Being made whole.

Regarding health insurance, which of the following is worse for the Insured?

Cancelable policy

If an Insured temporarily conveys some of the rights of policy ownership to a lender to help secure a loan, what is this called?

Collateral Assignment

Which of the following permits a Term Policy to be changed to a permanent policy without proof of insurability?

Conversion Provision

Which of the following would NOT be eligible for a Keogh plan?

Corporation

Which of the following provides extra funds for the policy owner to spend as desired?

Critical Illness Policy

Which policy provision requires the Insured to pay a specified dollar amount of the loss?

Deductible

Which of the following will endow at the earliest date?

Endowment Life

Which of the following policies will provide free coverage on any additional newborns?

Family Policy

Under what circumstances can a policy owner exercise the Free Look Provision?

For any reason as long as it is within the specified time period.

Each of the following involves pure risk EXCEPT:

Gambling in Vegas.

Each of the following statements regarding Group Health Insurance is true EXCEPT:

Group Health policies always have a 10-day Free Look Provision.

MSAs and HSAs are used with:

High Deductible Health Plans

Which of the following statements is true regarding settlement option selection by the beneficiary?

If the policy owner did not select a settlement option prior to policy maturity, the beneficiary can choose.

An Insurer is willing to issue a health policy but the policy will not cover the Insured's knee problem. The relevant policy provision is the:

Impairment rider

What is used to create a Return of Premium Rider?

Increasing Term Insurance

HMOs are funded in which of the following ways?

Insured's payment of a pre-paid fee.

Which section of the life policy may provide that the policy will not pay claims due to military action, foreign travel, or suicide?

Insuring Agreement

Which section of the health policy contains the pre-existing conditions?

Insuring Clause

Jim has a Group Health plan at work. He has a heart attack and decides to leave his job. Within 31 days, Jim applies to convert his group coverage to an individual policy, what will the Insurer do?

Issue a standard policy without subjecting him to a pre-existing condition exclusion.

Which of the following statements regarding the Automatic Premium Loan Provision is true?

It is designed to prevent the policy from lapsing by using the cash value as collateral for a premium loan.

Which of the following types of Insurance will pay an income benefit to a company when an employee becomes disabled?

Key Employee Disability Income Insurance

What is the name of the policy that is designed to protect a company if a key person dies?

Key Person Life Insurance

Which provision found in Disability policies stipulates that the Insured must wait 60 days after filing a claim before filing a lawsuit against the Insurer?

Legal Action

Which of the following is a government program that provides government financed medical coverage for those with low income - thus it is not actually an insurance policy?

Medicaid

Which of the following has a premium that isn't level and fixed?

Modified Life

Which type of insurance company is owned by its policyholders?

Mutual Company

Which of the following Term policies would cost the least?

Non-renewable and non-convertible.

The Fair Credit Reporting Act prevents the Insurer from:

Obtaining a consumer investigative report without notifying the applicant.

Which is a community based provider of insurance benefits:

PPO

The Social Security Administration is the sole source of funding for which Medicare coverage section?

Part A

Under an IRA:

Payouts must begin by 72.

Bill and his wife June are very successful doctors. They are worried about estate taxes. They should:

Purchase a Survivorship Life policy for the amount of estate taxes they expect will be due when they die.

The main difference between Non-Qualified retirement plans and Qualified retirement plans is:

Qualified plans feature special tax treatment and Non-Qualified plans do not.

The DI policy's Time of Payment of Claims provision permits each of the following benefit payment modes EXCEPT:

Quarterly

Uncertainty of loss is:

Risk.

Which policy is paid for with only one deposit?

Single Premium Life

Which of the following would permit an Insured's wife to purchase life insurance?

Spouse's Rider

Under which of the following circumstances is a person most likely to be eligible for reinstatement?

Stan surrendered his Whole Life policy one year ago and opted for the Reduced Paid-Up Insurance Nonforfeiture Option.

Which involves a life policy used to provide funds to purchase the stock of a deceased shareholder?

Stock Redemption Plan

What document becomes part of the contract and includes information about the Insured?

The Application

All of the following must sign an application for Key Employee Life Insurance EXCEPT:

The Insurer

Which of the following will limit the amount of Disability Income coverage an applicant may purchase?

The applicant's income tax documentation.

Justin was fired from his job on August 8th and his company promptly informed him on that date that he had the right to convert his Group Term Life policy. On September 24th, Justin decided he would like to convert. What will happen?

The conversion privilege is no longer available because he waited beyond 31 days. No policy will be issued.

Jack and Nancy are both killed in a car accident. Jack has a Life policy that names Nancy as the primary beneficiary and their daughter, Cassie as the contingent beneficiary. Under the Common Disaster Clause, who will receive the death benefit if Nancy lived 5 minutes longer than Jack?

The daughter (Cassie).

With an individual life policy, which of the following is true regarding taxation?

The death benefit is not taxable to the beneficiary.

A policy's coverage becomes effective when?

The policy is physically delivered to the applicant, assuming the premium has been paid.

What happens when the whole life policy's grace period expires?

The policy lapses.

Nancy is the beneficiary on Jack's Life policy and their daughter Cassie is the contingent beneficiary. Nancy and Jack are involved in a serious car accident, which kills Jack instantly. Nancy is on life support for two weeks and then dies. What will happen under the Common Disaster Clause?

The policy proceeds will be paid to Cassie.

Each of the following statements about Variable Universal Life is correct EXCEPT?

The premium funds are placed in the company's general account to be invested by the company.

Which of the following statements about Universal Life is CORRECT?

The premiums are flexible.

Which of the following is NOT one of the required policy provisions?

The right to obtain a copy of the consumer inspection report if the Insurer denies coverage based on information in the report.

Which of the following is a characteristic of Long Term Care policies?

They must contain a nonforfeiture provision.

Each of the following is a reason people purchase Life Insurance EXCEPT:

To pay a benefit if the insured is hospitalized.

Which of the following will an AD&D policy cover?

Traveling as a fare-paying passenger on a regularly scheduled flight.

Social Security provides each of the following benefits EXCEPT:

Unemployment benefits

A securities license is required to sell which of the following?

Variable Universal Life

When does an Endowment Life policy mature?

When the Insured dies or reaches the age or date of endowment.

Which of the following dividend options would be of importance to an Insured's tax accountant?

accumulate at interest

A Blanket Policy policy may be used by:

an airline to cover passengers.

Life insurance protects against:

dying too soon.

HIPPA is concerned with safeguarding the privacy of:

health information.

The Payor Benefit Rider is commonly found in policies insuring:

juveniles.

An AD&D Rider will cover each of the following accidents EXCEPT:

loss of hearing.

"Usual, reasonable, and customary" refers to a method of paying for:

medical provider bills.

In Life insurance the Contestable Clause (also known as the Incontestable Clause) applies to each of the following situations EXCEPT:

misstatement of age.

An adjustable life policy is unique in that it allows for adjustment of the:

premium

The frequency of premium payments chosen by the Insured refers to the:

premium mode.

Which of the following is NOT a characteristic of Annually Renewable Term:

premiums are level and fixed and don't ever increase.

Variable Life Insurance has:

premiums that are level and fixed.

Each of the following may be a reason for denying a policy EXCEPT:

sex (gender)

During the pay-in phase, funds in the Qualified Annuity's cash value account grow on what basis?

tax-deferred

In the case of a STOLI or IOLI, the policy is usually sold by which of the following?

the broker

What is "limited" with a Limited Pay policy?

the number of premium paymentsthe number of premium payments

The 10-day Free Look Period begins when:

the policy is delivered.

If the policy owner fails to pay the premium on a Whole Life policy during the Grace Period:

the policy will lapse but the policy owner won't forfeit the cash value account.

Because the Insurer's promise to pay claims is the only promise in an insurance contract, insurance policies are considered:

unilateral.