LH questions

what is the maximum penalty for habitual willful noncompliance with the fair credit reporting act

$2,500

at what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized

65

what is the required number of participants in a contributory group plan?

75%

two attorneys at law and operate their practice as a partnership. they want to start a program through their practice that will provide retirement benefits for themselves and three employees. they would likely choose

HR 10 Keogh Plan

the two types of assignments are

absolute and collateral

a universal life insurance policy is best described as

an annually renewable term policy with a cash value account

what product will protect an individual from outliving his or her money

annuity

an agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. who must then initial that change?

applicant

an insurer wants to begin underwriting procedures for an applicant. what source will it consult for the majority of its underwriting information

application

what is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?

common disaster clause

what characteristic makes whole life permanent protection?

coverage until death or age 100

what component increases in the increasing term insurance

death benefit

what agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled

disability buy sell

for a retirement plan to be qualified, t must be designed for the benefit of

employees

the automatic premium loan provision is activated a the end of the

grace period

who makes up the medical information bureau

insurers

in the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. what is true concerning the policy premium?

it will likely be higher because the applicant is a substandard risk

under the fair credit reporting act, individuals rejected for insurance due to information contained in a consumer report

must be informed of the source of the report

qualified medical expenses paid for participants in a medical savings account are

not taxable

what provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss

notice of claim

a prospective insured receives a conditional receipt but dies before the policy is issued. the insurer will

pay the policy proceeds only if it would have issued the policy

what rider does not cause the death benefit to increase

payor benefit

what type of beneficiary is changeable at any point

revocable

what type of retirement account allows contributions to continue beyond age 70 1/2 and does not force distributions to start at age 70 1/2

roth IRA

if an agent wishes to sell variable life policies, what license must the agent obtain?

securities

equity indexed annuities

seek higher returns

a domestic insurer issuing variable contracts must establish one or more

separate accounts

the interest earned on policy dividends is

taxable

the limits of a health reimbursement account are set by

the employer

how do employer contributions to a health savings account affect the insured's taxes?

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

who bears all the investment risk in a fixed annuity?

the insurance company

for the purpose of insurance, risk is defined as

the uncertainty or chance of loss

what is generally true regarding insureds who have been classified as preferred risks?

their premiums are lower

an insured makes regular contributions to his health savings account. how are those contributions treated in regards to taxation

they are tax deductible

S is a sole business proprietor who owns a medical expense plan. what percentage of the cost of the plan may he deduct

100%

to be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan?

18 months

HIPAA applies to groups of

2 or more

employers can reduce health plan costs by coupling a HRA with

a high deductible health plan

what is a feature of a disability buyout plan?

a lump sum benefit payment option

if a company has a simplified employee pension plan, what type of plan is it?

a qualified plan for a small business

occasional visits by what medical professionals will not be covered under LTCs home health care

attending physicians

life insurance death proceeds are

generally not taxed as income

the benefits received by the business in a disability buy sell policy are

income tax free

if a retirement plan or annuity is "qualified" this means

it is approved by the IRS

death benefits payable to a beneficiary under a life insurance policy are generally

not subject to income taxation by the federal government

an insured has a continuous premium whole life policy. she would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. what dividend option could she use

paid up option

which nonforfeiture option provides coverage for the longest period of time

reduced paid up

what type of life insurance policy generates immediate cash value?

single premium

events in which a person has both the chance of winning or losing are classified as

speculative risk

when an employee covered under a health reimbursement account changes employers, the HRA

stays with the employer

in comparison to consumer reports what is a unique characteristic of investigative consumer reports

the customer's associates, friends, and neighbors provide the report's data

the sole beneficiary of a life insurance policy dies before the insured. if the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to

the insured's estate

what would provide an underwriter with information concerning an applicant's health history?

the medical information bureau

under a simple plan what is true regarding taxation on both contributions and earnings

they are tax deferred until withdrawn

what is the purpose of a disclosure statement in life insurance policies?

to explain features and benefits of a proposed policy to the consumer

premiums paid by self employed sole proprietors or partners for medical expense insurance are

totally tax deductible

in insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. what contract element does this describe?

unilateral

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

100%

how many consecutive months of coverage must LTC insurance provide in this state

12

regarding long term care coverage, as the elimination period gets shorter, the premium

gets higher

what provision in an insurance policy extends coverage beyond the premium due date

grace period

in LTC policies, as the benefit period lengthens, the premium

increases

when health care insurers negotiate contracts with health care providers or physicians to provide health care services for subscribers at a favorable cost, it is called

preferred provider organization

an Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is

403(b) plan (tsa)

premium payments for personally owned disability income policies are

not tax deductible

nonforfeiture values guarantee what for the policyowner

that the cash value will not be lost

if a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back

the balance of the loan will be taken out of the death benefit

if a life insurance policy has an irrevocable beneficiary designation...

the beneficiary can only be changed with written permission of the beneficiary

what would be an example of a limited accident and health insurance policy?

dread disease policy

what required provision protects against unintentional lapse of the policy

grace period

the medical information bureau was created to protect

insurance companies from adverse selection by high risk persons

if an applicant does not receive a new insurance policy, who would be held responsible

the agent

when a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount

equal to the original policy for as long a period of time that the cash values will purchase

what is the other term for the cash payment settlement option

lump sump

what is another term for the accumulation period of an annuity

pay in period

other than for a qualified life event, when can a change by made in benefits for a flexible spending account

during the open enrollment period

if an annuitant dies before annuitization occurs, what will the beneficiary receive?

either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

under a key person disability income policy, premium payments

are made by the business and are not tax deductible

an individual has been diagnosed with Alzheimer's disease. he is insured under a life insurance policy with the accelerated benefits rider. what is true regarding taxation of the accelerated benefits?

a portion of the benefit up to a limit is tax free; the rest is taxable income

how are HMO territories typically divided

by geographic areas

in disability income insurance, another name for the waiting period is the

elimination period

in life insurance policies, cash value increases

grow tax deferred

at the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. this rider is called

guaranteed insurability

most LTC plans have what feature?

guaranteed renewability

HSAs are designed to

help individuals save for qualified health expenses

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

interest only

what would an advantage to naming a contingent beneficiary in a life insurance policy

it determines who receives policy benefits if the primary beneficiary is deceased

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 S&P 500. she would likely purchase

an equity indexed annuity

what is the benefit of choosing extended term as a nonforfeiture option

it has the highest amount of insurance protection

what program expands individual public assistance programs for people with insufficient income and resources

medicaid

what explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?

owner's rights

what is true concerning the taxation of premiums in a key person life insurance policy

premiums are not tax deductible as a business expense

for an individual who is not covered by an employer sponsored plan, IRA contributions are

tax deductible

your client wants to know what the tax implications are for contributions to a health savings account. you should advise her that the contributions are

tax deductible