insurance final exam

Réussis tes devoirs et examens dès maintenant avec Quizwiz!

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called

Limited-Pay Life

Which contract permits the remaining partners to buy-out the interest of a disabled business partner?

Disability Buy-Sell llows the remaining partners to buy out the interest of the disabled business partner.

Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance?

Disability income policy premiums are tax-deductible, However, the benefits would be considered tax-free to the individual.

Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?

Each partner must own a policy on the other partners

Under a trustee group life policy, who would be eligible for a certificate of coverage?

Employee

The federal income tax treatment of employer-provided group health insurance can be accurately described as

Employee's coverage paid for by the employer is tax-deductible to the employer as a business expenditure

Which of these is considered a true statement regarding Medicaid?

Funded by both state and federal governments

Which requirement must be met for an association to be eligible for a group life plan?

Group was formed for a purpose other than acquiring insurance

A medical care provider which typically delivers health services at its own local medical facility is known as a

Health Maintenance Organization (HMO's)

Which type of provider is known for stressing preventative medical care?

Health Maintenance Organizations (HMO's)

A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary?

Her group health plan

How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?

If the primary beneficiary dies before the insured

Which of these actions should a producer take when submitting an insurance application to an insurer?

Inform insurer of relevant information not included on the application

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

Insured's contingent beneficiary

T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition?

Insurer will likely treat as a pre-existing condition which may not be covered for one year

In a Life insurance contract, an insurance company's promise to pay stated benefits is called the

Insuring clause

How are policyowner dividends treated in regards to income tax?

Interest on accumulations is taxed

A policyowner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need

Irrevocable

A policyowner's rights are limited under which beneficiary designation?

Irrevocable

Which of the following situations does a Critical Illness plan cover?

Leukemia is a type of cancer and would be covered

Comprehensive Major Medical policies usually combine

Major Medical with Basic Hospital/Surgical coverage

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

Modified Whole Life

Which of these life products is NOT considered interest-sensitive?

Modified Whole Life

Which of these is NOT considered to be a right given to a policyowner?

Modify a provision in the insurance contract

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's Rights

A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the

Policy Loan provision

Which statement is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

Which of these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if payor becomes disabled

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?

Primary Insurance Amount (PIA)

What is the consideration given by an insurer in the Consideration clause of a life policy?

Promise to pay a death benefit

J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?

Revocable

S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?

Single Premium. Immediate Annuities are purchased with a single lump sum payment and will start providing income payments within the first year, but usually starting 30 days from the purchase date.

The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)

Straight Life annuity

What type of life insurance are credit policies issued as?

Term

Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deducitble?

The Carryover provision permits expenses incurred during the last three months of the calendar year to be carried over into the new year if needed to satisfy the deductible for the next year.

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount

A policy of adhesion can only be modified by whom?

The insurance company

Medicare is intended for all of the following groups EXCEPT

Those enrolled as a full-time student

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life

A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled?

Utilities and office rent

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable Life

The reason for a business having a Business Overhead Expense Disability Plan is to cover

fixed business expenses in the event the owner becomes disabled.

What kind of special need would a policyowner require with an Adjustable Life insurance policy?

flexible premiums and/or face amount

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT

free-look period has expired

A variable insurance policy does not what

guarantee a return on its investment accounts

With a Basic Medical Expense policy, what does the hospitalization expense cover?

hospital room and board

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have

insurable interest in the proposed insured

Credit Life insurance is

issued in an amount not to exceed the amount of the loan. is designed to cover the life of a debtor and pay the amount due on a loan if the debtor dies before the loan is repaid.

Which statement regarding third-party ownership of a life insurance policy is true?

it is used extensively in estate-planning as well as business circumstances

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

policy proceeds

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

$0

Q is hospitalized for 3 days and receives a bill for $10,100. Q has a Major Medical policy with a $100 deductible and 80/20 coinsurance. How much will Q be responsible for paying on this claim?

$10,000 x 20% coinsurance + $100 deductible = $2,100.

J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause. If J is hospitalized and receives a bill for $10,000, J would pay

$2,000 + 20% of the remaining bill = $3,600.

M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim?

$2,200 - $200 deductible x 80% = $1,600.

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

$50,000. The suicide occurred outside the Suicide clause period (normally 1-2 years), thus the face amount will be paid.

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

30 Pay Life

One becomes eligible for Social Security disability benefits after having been disabled for

5 months

An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

59 1/2

Which of these is an element of a Variable Life policy?

A fixed, level premium

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

Accidental Death and Dismemberment provision. provides benefits for death due to an accident or for the loss of one or more hands, feet, arms, legs, or loss of sight.

Under which of the following circumstances do the benefits under COBRA continuation coverage expire?

All group health plans are eliminated by the employer

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

Any changes made on an insurance application requires the initials of whom?

Applicant

An incomplete life insurance application submitted to an insurer will result in which of these actions

Application will be returned to the writing agent

When must insurable interest be present in order for a life insurance policy to be valid?

At the time of application

What is considered to be a characteristic of an immediate annuity?

Benefit payments start within one payment period of purchase

Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is

Business Overhead Expense

Which statement about a whole life policy is correct?

Cash value may be borrowed against

N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as

Coinsurance

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?

Collect initial premium along with a signed health statement

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?

Conditional

If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?

Contributory

What type of group plan involves employees sharing the cost?

Contributory plan

What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?

Conversion

Which statement regarding the Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

What provision in a life insurance policy states that the application is considered part of the contract?

Entire Contract provision

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Evidence of insurability is required when the option is exercised

Term insurance has which of the following characteristics?

Expires at the end of the policy period

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?

Face amount plus the policy's cash value

An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the

Fair Credit Reporting Act

From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?

Fair Credit Reporting Act

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

Fair Credit Reporting Act

What action should a producer take if the initial premium is NOT submitted with the application?

Forward the application to the insurer without the initial premium

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

Which of these is considered a statement that is assured to be true in every respect?

Warranty

What does the ownership clause in a life insurance policy state?

Who the policyowner is and what rights the policyowner is entitled to

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will

adjust the death benefit to a reduced amount

Group life insurance policies are generally written as

annually renewable term

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the

applicant's physician

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT

beneficiary's age

Medicare Part A and Part B do NOT pay for

dental work

What is the purpose of the U.S.A. Patriot Act?

detect and deter terrorism

When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)

exclusion

On a life insurance policy, who is qualified to change the beneficiary designation?

the Policyowner

A noncontributory group term life plan is characterized by

the entire cost of the plan is paid for by the employer

The Consideration clause in a life insurance policy indicates that a policyowner's consideration consists of a completed application and

the initial premium

The amount of coverage on a group credit life policy is limited to

the insured's total loan value

An individual who purchases a Life annuity is given protection against

the risk of living longer than expected


Ensembles d'études connexes

US history- chapter 16 Capital and Labor

View Set

Campbell Biology Chapter 8 review

View Set