Life, Accident and Health test 2
Dick has a disability income policy with an AD&D rider. The rider includes a capital sum of $5,000. Six months after the policy was purchased, Dick is killed in an auto accident. What amount will be paid to his beneficiary? $10,000 $5,000 $20,000 $25,000
$10,000
Jerry has a comprehensive major medical expense plan which provides 100% coverage for the first $3,000 of covered expenses followed by a corridor deductible of $500, 80/20 coinsurance and 100% coverage after $15,000 of covered medical expenses are incurred. The insured incurs $10,000 of covered expenses. How much will the insurer pay? $8,100 $1,800 $8,200 $10,000
$8,200
According to COBRA, a laid off employee may extend health coverage for up to what period of time: 3 months 6 months 12 months 18 months
18 months
Which of the following best describes a return of unused premiums to a policyowner from a whole life insurance contract? A flat rate A dividend A cash surrender A capitalized refund
A dividend
If a deductible must be satisfied each time a new claim is submitted in a calendar year, it is known as: An initial deductible A calendar year deductible A per loss deductible A per family deductible
A per loss deductible
Part A of Medicare is sometimes referred to as the "premium free" portion of Medicare. Some individuals are eligible for coverage prior to age 65. Which of the following would be eligible for benefits prior to this traditional age ? A person requiring daily dialysis treatment A person who is receiving chemotherapy A person who has severe hearing problems A person who suffers an occupational injury
A person requiring daily dialysis treatment
Replacement is a transaction in which a new life insurance policy is to be purchased and due to this purchase, an existing life insurance policy has or will be lapsed, forfeited, surrendered or terminated. Which of the following would not be considered a replacement? A policy continued as decreasing term insurance A policy pledged as collateral A policy reissued with any reduction in cash value A policy converted to extended term insurance
A policy continued as decreasing term insurance
All of the following statements are true regrading a representation, EXCEPT: Representations appear on an insurance application A representation of a fact is the same as an expression of opinion or attitude A policy is usually voidable if a material fact is misrepresented Representations may be written or oral
A representation of a fact is the same as an expression of opinion or attitude
The policyowner wishes to provide for the care of her minor child in the event of premature death. To accomplish this, the owner should probably designate as beneficiary: A spouse as a revocable beneficiary The estate of the deceased A favorite charitable organization A trust
A trust
Hal purchases a disability income policy from an insurer who does not wish to provide coverage for a pre-existing condition. Therefore, in order for Hal to have purchased the policy, he agreed to the inclusion of which of the following? A non-disability injury A waiver of premium A recurrent disability premium An impairment rider
An impairment rider
An increasing term rider is characterized by which of the following? An increasing face amount An increasing premium An increasing settlement portion An increasing investment value
An increasing face amount
Which of the following statements regarding the Fair Credit Reporting Act (FCRA) is correct? If an applicant for insurance is rejected based on a consumer report, the name of the reporting agency must be kept confidential Applicants must be notified within a short period of time that their credit report has been requested If requested to do so, the insurance company must provide the actual consumer report to the applicant Consumer reports are final in nature and cannot be disputed by an applicant
Applicants must be notified within a short period of time that their credit report has been requested
If an insurer terminates a producer who has acted on its behalf in the sale of insurance products, the insurer will: Cancel the producer's appointment Suspend the producer's license Revoke the producer's license Terminate the producer's commission
Cancel the producer's appointment
A universal life insurance policy provides a combination of term insurance protection and: Current bond yield A non-forfeiture value Cash savings plan A deferred income
Cash savings plan
An adjustable life insurance policy provides the policyowner the flexibility Change the face amount at various intervals Reduce the premium at various intervals Adjust cash values on an annual basis Change the interest rate paid on the cash value each year
Change the fact amount at various intervals
A Modified Endowment Contract is a whole life policy that does not satisfy the seven pay test. Which of the following statements is true concerning this classification of life insurance policy? Distributions prior to age 59 1/2 are subject to a penalty It is a policy whose cash value exceeds its death benefit following a limited period It combines temporary protection with equity invested in securities It is any type of permanent policy paid up at age 65
Distributions prior to age 59 1/2 are subject to a penalty
Which of the following does not allow withdrawals or distributions for non-medical expenses? Medical Savings Accounts Health Savings Accounts Flexible Spending Accounts Health Reimbursement Accounts
Flexible Spending Accounts
When an annuity contract is delivered to its owner by a producer, which of the following allows for a review of the contract and a full refund if the owner decides to return it to the insurer: Entire contract provision Free-look provision Consideration provision The review provision
Free-look provision
Which of the following is not considered to be one of the Required Uniform Accident and Health policy provisions? Grace period Free-look provision Time of payment of claims Claim forms
Free-look provision
Allan is 44 years of age and is awarded a $2.5 million settlement as a result of an auto accident. Due to the accident, Allan is totally disabled and can no longer earn an income. If he wishes to purchase an annuity with part or all of the award, what type of contract would you, as the producer, recommend? Joint and survivor annuity Deferred annuity Immediate annuity Fixed annuity
Immediate annuity
Which of the following will allow a chronically ill individual to generally receive a larger living benefit than an accelerated benefit rider ? Term life insurance policy Terminal illness rider Executive bonus Life or viatical settlement
Life or viatical settlement
Jeff is 42 years of age and is attempting to decide what type of whole life policy he should buy. If cash flow is his primary consideration, which of the following policies would be most beneficial to Jeff? Twenty-pay whole life Life paid-up at age 65 Single premium whole life Ten-year endowment
Life paid-up at age 65
If an individual desires life insurance protection and cash value buildup and is willing to pay premiums until retirement, what type of policy would he or she purchase? An annuity Limited payment life An endowment at age 55 Straight life
Limited payment life
Social Security is also known as: CPI OSHA Part A OASDHI
OASDHI
Which of the following is best suited for providing retirement benefits for a firm with 600 employees? 403(b) plan Pension plan Traditional IRA 457 deferred compensation plan
Pension plan
Which of the following risk classifications is characterized by a lower annual premium? Preferred risk Substandard risk Standard risk Personal risk
Preferred risk
Which statement is true regarding buy-sell taxation? Premiums are deductible, the death benefit is taxable. Premiums are deductible, the death benefit is not taxable. Premiums are not deductible, the death benefit is taxable. Premiums are not deductible, the death benefit is not taxable.
Premiums are not deductible, the death benefit is not taxable
Tax law may also influence premiums paid for life insurance protection. Which of the following statements pertaining to life insurance premiums is correct? Premiums for policies in which the insured is someone other than the policyowner are tax-deductible The premiums paid by a husband for an individual policy that insures a spouse are tax-deductible A corporation may purchase key-person life insurance and deduct the premiums as a business expense Premiums for group term life insurance covering employees are tax-deductible, assuming certain requirements are satisfied
Premiums for group term life insurance covering employees are tax-deductible, assuming certain requirements are satisfied
A prepaid life insurance policy is issued. When the policy is delivered by the producer, he or she should: Complete a statement of continued good health Remind the policyholder of the ten-day free-look Ask relevant questions of the beneficiary Collect premium for the first month of coverage
Remind the policyholder of the ten-day free-look
A statement made by an applicant or policyholder that is true to the best of her knowledge is known as: Declaration Warranty Representation Declination
Representation
A life insurance policy is comprised of numerous provisions. Which of the following protects a beneficiary from creditors when proceeds at death are left with the insurer? Beneficiary provision Premium payment provision Spendthrift provision Settlement option provision
Spendthrift provision
Benefits received from an AD&D policy are: Taxable Tax-free Tax-deferred Tax sheltered
Tax-free
In locales that do not require elections, a Commissioner or Superintendent of Insurance is generally appointed to his or her position by which of the following? The State Legislature The Department of Labor The Governor of the State The National Association of Insurance Commissioners
The Governor of the State
During the underwriting process, who is the attending physician? A disinterested physician The insurance company's physician The applicant's physician The holder's physician
The applicant's physician
If an insured purchases a decreasing term life insurance policy, what portion of the contract decreases? The non-forfeiture values The cash values The annual premium The death benefit
The death benefit
Each of the following are important life or health insurance underwriting factors, EXCEPT: Consumer report Medical history The agent's report The initial premium
The initial premium
Claims must be submitted to an insurer in a timely fashion. Which of the following is correct regarding the claim process? The insured has 20 days to notify the insurer of a claim and the insurer has 15 days to provide claim forms The insured has 15 days to notify the insurer of a claim and the insurer has 20 days to provide claim forms The insured has 10 days to notify the insurer of a claim and the insurer has 20 days to provide claim forms The insured has 10 days to notify the insurer of a claim and the insurer has 10 days to provide claim forms
The insured has 20 days to notify the insurer of a claim and the insurer has 15 days to provide claim forms
Part A of Medicare provides hospital insurance coverage. Each of the following is true regarding this section of Medicare coverage, EXCEPT: The insured must pay a premium for Part A coverage An insured must satisfy a deductible under Part A Benefits provided by Part A can continue beyond the period of hospitalization Hospice care is covered by Part A
The insured must pay a premium for Part A coverage
Acceptance of an offer for insurance is indicated by: The issuance of the policy The filing of a claim The submission of an application The death of an insured
The issuance of the policy
John owns a whole life policy. If he uses the equity in it to secure a loan, which of the following is true? The lender is assigned the cash value of the policy The lender becomes the owner of the policy The lender becomes the primary beneficiary for its interest The lender becomes the contingent beneficiary
The lender becomes the primary beneficiary for its interest
Which of the following does not affect the benefit paid to an annuitant? The age of the annuitant The sex of the annuitant The occupation of the annuitant The value of the contract
The occupation of the annuitant
Which of the following accident and health provisions allows an insurer to deny a claim if it finds during the first two years of the contract that the insured engaged in a material misrepresentation? Grace period Time limit on certain defenses Reinstatement Entire contract
Time limit on certain defenses
Which benefit included in an accident and health insurance policy makes sure that a policy will not lapse if the insured is totally disabled? Waiver of premium Entire contract Cost of living rider Dependent rider
Waiver of premium
Which of the following provisions guarantees payment of premiums in the event of the total disability of an insured? Disability income rider Entire contract provision Waiver of premium benefit Continuation of coverage provision
Waiver of premium benefit
In order for an insurance policy to be legal, there must be a valid offer and acceptance present. The offer is usually made in which of the following instances? When the policy is issued by the underwriting department When the application is submitted to the underwriting department When the policy is delivered to the policyowner by the producer When the insurer approves the application
When the application is submitted to the underwriting department
When a producer completes an application and collects the initial premium, he or she must leave a premium receipt with the applicant. A conditional premium receipt states that coverage is effective: When the policy is issued As of the date the application is approved by underwriting When the policy is delivered As of the date of receipt if the application is approved
As of the date of receipt if the application is approved
If your client is a CPA and wishes to make sure operating expenses will be covered if she becomes disabled, what policy will you recommend she purchase? Business overhead expense policy Business income policy Business interruption policy Disability buy-out
Business overhead expense policy
An optional health insurance policy provision which allows the insurer to adjust benefit payments under certain situations or permits the insured to receive a reduced premium in other circumstances, best describes: Payment of claims Change of occupation Relation of earnings to insurance provision Time limit on certain defenses
Change of occupation
In which of the following situations is a physician considered to be an employee of a Health Maintenance Organization? Neither an open panel nor a closed panel plan Open panel plan Open panel and closed panel plan Closed panel plan
Closed panel plan
Employer group health insurance provides access to dependents. If the covered employee has a special needs dependent child who is covered by the plan, which of the following is true ? Coverage will provided for the dependent up to age eighteen Coverage continues for the dependent as long as the plan remains in force and appropriate premiums are paid Coverage is only provided if proof of dependency is provided at each renewal Coverage will remain in force for as long as the dependent child lives
Coverage continues for the dependent as long as the plan remains in force and appropriate premiums are paid
Which of the following is true regarding an interest sensitive whole life policy? Interest credited increases cash value and shortens the premium payment period Interest credited decreases cash value and shortens the premium payment period Interest credited increases cash value and lengthens the premium payment period Interest credited decreases cash value and lengthens the premium payment period
Interest credited increases cash value and shortens the premium payment period
Which of the following is true regarding dividends paid by a permanent life insurance policy? They are taxed as ordinary income Interest earned on dividends is taxable They are tax-deductible Dividends plus interest are tax-deductible
Interest earned on dividends is taxable
Which of the following is not a responsibility of a field underwriter? Issue a policy Complete applications Collect premium Provide a premium receipt to an applicant
Issue a policy
Once a whole life policy is considered by tax authorities to be a modified endowment contract, which of the following will occur? It will automatically mature It can revert back after seven years It can never revert back It may be included in the gross estate
It can never revert back
Which of the following is a purpose of the law of large numbers? It helps insurers develop rates It helps insurers settle claims It helps insurers indemnify an insured It helps make an insured whole again
It helps insurers develop rates
A survivorship life policy generally covers two individuals. Which of the following provides a reason for purchasing such a life insurance policy? It provides protection to a surviving spouse when the breadwinner dies It provides funds to pay off possible estate or inheritance taxes It protects a family when the first covered person dies It provides protection for a family when the primary insured reaches retirement age
It provides funds to pay off possible estate or inheritance taxes
Some life insurance policies may cover more than one individual. A life insurance contract which insures two or more individuals with the proceeds paid upon the death of the first to die is known as a: Joint and survivor policy Survivorship life policy Joint life policy Family policy
Joint life policy
Which provision states that no action can be brought against an insurer (by the insured) until 60 days after written proof of loss has been furnished to the insurer? Proof of loss Claim forms Legal action Notice of claim
Legal action
The type of annuity which guarantees the owner a fixed interest rate for a specific period of time is known as a: Refund annuity Indexed annuity Market value adjusted annuity Variable annuity
Market value adjusted annuity
Which of the following health coverage providers requires an individual to "spend down" their income or assets before they are eligible for coverage ? Medicare Medicare Supplements Long Term Care Medicaid
Medicaid
Medicare Supplement plans are also referred to as Medigap insurance. Which of the following statements is true regarding this type of health insurance policy? Medigap plans must be guaranteed renewable for life Medigap plans provide aid to families with dependent children Medigap policies are state and federally financed health care plans Medicare supplement policies must include a free-look period of at least ten days
Medigap plans must be guaranteed renewable for life
A producer who guarantees the payment of dividends by a policy of insurance has engaged in: Twisting Misrepresentation Defamation Rebating
Misrepresentation
Qualified plans are those that are approved by the IRS. In order to receive "qualified" status, the plan must meet all of the following conditions, EXCEPT: Must be in writing Must not be discriminatory Must comply with the exclusion ratio formula Must satisfy minimum age and service standards
Must comply with the exclusion ratio formula
Which of the following is designed to prohibit a new insurer from using a preexisting condition provision to deny claims of persons who were covered under a prior group insurance plan if these claims would otherwise be covered under the new contract ? No loss no gain provision Conversion provision Group extension provision Coordination of benefits provision
No loss no gain provision
If a policy loan plus cash values exceed premium payments, which of the following is true? The policy becomes a modified endowment contract The policy must be surrendered The loan amount is tax-deductible The loan may be subject to taxation
The loan may be subject to taxation
A policy loan from a cash value life insurance plan is generally not taxable. However, part or all of it may be taxable as ordinary income if: The policy has been designated a modified endowment contract The total amount of premiums paid for coverage exceed the surrender value There is no designated beneficiary The policy proceeds are payable to the estate of the insured
The policy has been designated a modified endowment contract
A Comprehensive Major Medical insurance policy may be characterized by basic expenses and coinsurance. All of the following are true regarding this type of insurance policy, EXCEPT: There are no first dollar benefits It consists of basic expenses and major medical coverages It may include a corridor deductible The insured must pay a coinsurance amount
There are no first dollar benefits
In which of the following ways is an annuity similar to a whole life or term life insurance policy? They may both be used to fund a qualified plan They both pay a stipulated death benefit They are both characterized by pre-paid financing They both pay a benefit upon the death of the contract owner
They are both characterized by pre-paid financing
Which of the following best describes the primary purpose of managed care? To provide comprehensive first dollar coverages To control health insurance claim expenses To reduce a member or subscriber out-of-pocket expenses To provide a mechanism for health care for all
To control health insurance claim expenses
Why are underwriting requirements so carefully reviewed in a replacement policy sale? To ensure that the new replacement policy will indeed be issued To ensure commissions will be paid To prevent the existing policy from being lapsed before the replacement policy is issued To meet the requirements of the State insurance department
To prevent the existing policy from being lapsed before the replacement policy is issued
Which is the most liberal definition of the phrase "total disability"? Unable to perform the duties of your own occupation Unable to perform any occupation for which you are suited by training, education and experience Unable to perform any occupation All the definitions are essentially identical
Unable to perform the duties of your own occupation
Which of the following has an investment characteristic and includes a flexible premium? Limited payment life Variable life Universal life Variable universal life
Variable Universal Life
An insurer which issues an insurance contract after accepting an incomplete application may have engaged in which of the following: Representation Waiver Declaratory judgment Estoppel
Waiver
The purpose of a straight life annuity is to: Protect an individual against superannuation Protect an individual against premature death Protect an individual against investment risk Provide life income with the possibility of a refund
Protect an individual against superannuation
What provision in a disability income policy states that an insured may not have to satisfy a new waiting period with regard to a previous accident or illness? Reinstatement provision Recurrent disability provision Renewability provision Waiver of premium provision
Recurrent disability provision
A life insurance dividend may be paid on a participating policy. Which of the following dividend options can be used when the policyowner is interested in minimizing his outlay of funds? Accumulate at interest Reduce the premium Paid-up additions Reduced paid-up insurance
Reduce the premium
Which of the following is a method of determining a surgical expense benefit? Limited policy Relative value Physician's expense benefit Managed care
Relative value