Insurance Review
The insured's statement that guarantees certain things will be done after the policy has taken effect is called a(n)
promissory warranty
Premature IRA distributions are subject to a penalty tax of
10%
What is the maximum Social Security Disability benefit amount an insured can receive?
100% of the insured's Primary Insurance Amount
An insured must notify an insurer of a medical claim within how many days after an accident?
20
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?
20% is withheld for income taxes
The time limit an individual has to "rollover" funds from an IRA or qualified plan is
60 days
Which of the following combinations best describe a universal life insurance policy?
A flexible premium deposit fund and a monthly renewable term insurance policy
Which of these is an accurate statement regarding the fixed period settlement option on a life insurance policy?
A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds of the policy
Which of these would NOT be a valid reason to add the waiver of premium rider to a life insurance policy?
Allows a policyowner to take out a policy loan to cover premium payments in the event of total disability
How may an insurance company classify an accidental death benefit on a life policy?
As an optional policy rider
Which statement regarding the cash value of a whole life insurance policy is correct?
Available to the policyowner when policy has been surrendered
An example of the unfair restraint of competition would be
Coercion
Which of the following is NOT an intended use of an annuity?
Create new funds upon the death of a wage-earner
Linda is covered with long-term care insurance and has early-stage Alzheimer's. She is still able to reside in her home while receiving primary care, as opposed to moving into a nursing home. All of the following long-term benefits encourage this EXCEPT for
Custodial care
Which of these is NOT an underwriting responsibility of a life insurance agent?
Determining the final rate classification
What type of group plan is excluded from HIPAA statutes?
Disability income
An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately had the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?
Distribution is subject to federal income tax withholding
When using the needs approach for life insurance planning, lump sums may be created for all of the following reasons EXCEPT
Employee benefits
Which statement concerning an adjustable life insurance policy is FALSE?
Evidence of insurability is required when there is a change in premium
The difference between a doctor's actual charges and the amount approved by Medicare is called an
Excess charge
Long Term Care policies will usually pay for eligible benefits using which of the following methods?
Expense Incurred
Which statement concerning a decreasing term life policy is accurate?
Face amount decreases over the policy period
Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate
For federal tax income reasons
A business may purchase an annuity for all of the following reasons EXCEPT
Funding a non-qualified deferred compensation plan
An accident and health plan that typically covers only the services of approved providers is called a(n)
HMO plan
Terry receives long-term physical therapy at her residence. What type of insurance would cover this service?
Home Health Care
Some standard Medicare Supplement policies include which benefit?
Hospice care
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?
If Tom's employment is terminated, 20% of the funds could be forfeited
The type of health insurance in which underwriting procedures are the most restrictive is
Individual
Which of these procedures is NOT designed for ambulatory care centers?
Inpatient surgery
Which of these statements is NOT true regarding a cash value loan against a life insurance policy?
Interest payments made by policyowner are deductible
When a policy loan is requested by a policyowner and it requires the consent of the beneficiary, what kind of beneficiary designation is this?
Irrevocable beneficiary
What type of life insurance policy covers two or more persons and pays the face amount upon the death of the first insured?
Joint Life
Which of these pays an income to two or more annuitants until the death of the last annuitant?
Joint and survivor annuity
Laura added a children's rider to her life insurance policy. What type of coverage was added?
Level term
Which of these is NOT a common life insurance nonforfeiture option?
Life income annuity
Agreements made by terminally ill persons to sell their life insurance policies at a discount in order to pay medical expenses are called
Life settlements
A life policy that has premiums that are lower than normal during the early years is called
Modified life
The disability income policy most likely to have been issued on a substandard basis is
Non-cancelable with a health condition exclusion rider
When funds are transferred directly from one IRA to another IRA, what percentage of the tax is withheld?
None
A signed good health statement may be collected by a life producer at the time of
Policy delivery
Which of the following statements BEST describes disability buy-sell insurance policies?
Policy proceeds are typically received tax-free
The agreement in which hospitals and physician groups in a specific area contract with an insurance company to provide medical care at predetermined costs is
Preferred Provider Organization
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
Premium payments are waived in the event the premium payor dies or becomes disabled
How are level term policies able to provide level premiums?
Premiums are averaged over the term of the policy
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
Producer
Which benefit can be found in an equity indexed annuity, but not in a fixed annuity?
Protection against long-term inflation
How are qualified Roth IRA distributions normally treated for tax purposes?
Received income tax-free
An individual may become licensed as a nonresident intermediary without passing a written examination by
Reciprocal arrangement with the state of domicile
An insured covered under a Disability Income policy is disabled and collecting benefits for a period of two months. He returns to work and is again disabled from the same cause, whereupon benefits continue to be paid. This is an example of which of the following?
Recurrent disability
Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?
Reimbursement
Which of the following is NOT a basic underwriting action for accident and health insurance?
Removing uniform policy provisions
Claims settlement practices of insurers are regulated by:
State insurance departments
All of these statements concerning group credit life insurance are false EXCEPT
The face amount is determined by the outstanding loan balance
Which statement regarding the joint and survivor life insurance settlement option is INCORRECT?
The installment amounts are larger as compared to a single life income option
Which of these statements regarding the extended term insurance nonforfeiture option is accurate?
The premium to purchase the coverage comes from the policy's cash value
Darrell has a group long-term disability income policy paid by his employer. Which of these statements is true?
The specified benefit amount is a percentage of his wages
What is the effect of the market value adjustment in a market value adjustment annuity?
Transfers some of the investment risk to the policyowner
What would be the disadvantage of naming a trust as beneficiary of a life insurance policy?
Trust administration fees would reduce policy proceeds
Which of the following best describes the presumptive disability provision?
Waives the normal total disability requirements
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?
When the conditions of the receipt are met
When does interest income for a flexible premium deferred annuity get reported for federal income taxes?
When the distributions are received from the contract
Which life insurance policy would be eligible to include an automatic premium loan provision?
Whole Life
Emergency health care coverage for Medicare enrollees traveling abroad is
a core benefit under a Medicare Supplement
An annuity's accumulation period can usually
continue after the purchase payments stop
The contractual rights that allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called
nonforfeiture options
Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that were
not distributed to life annuitants who died before life expectancy
The interest credited to the cash values of personally-owned non-qualified annuities is considered
tax deferred
Under a key person disability income policy, benefits will be received as
tax-free income to the business
The exclusion ratio determines
the amount of an annuity payment subject to income tax
A material change in a modified endowment contract results in
the seven pay test, adjusted for cash value, being applied again
An insurance policy that can also be classified as a securities product is called
variable life
The conversion option for group term insurance may be exercised by an employee
within 31 days of terminated employment
What qualifies as acceptance of an insurance contract offer?
An issued policy
Misrepresenting pertinent policy provisions relating to coverage after a loss is
An unfair claims settlement practice
During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to?
Annuitant
Traditional individual retirement annuity (IRA) distributions must start by
April 1st of the year following the year the participant attains age 70 1/2
