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All of the following benefits are available under Social Security EXCEPT: A) old-age or retirement benefits. B) disability benefits. C) welfare benefits. D) death benefits.
Answer: C Social Security provides death benefits, old-age or retirement benefits and disability benefits to eligible workers. Social Security is an entitlement program, not a welfare program
Under the standard cancellation provision, an insurance company has the right to cancel a policy at any time with how many days' written notice to the insured? A) 60 days. B) 30 days. C) 15 days. D) 5 days.
Your answer, 15 days., was incorrect. The correct answer was: 5 days. Under the standard cancellation provision, the insurance company has the right to cancel the policy at any time with five days' written notice to the insured. This provision is nevertheless prohibited in many states.
Patrick owns an adjustable life policy. Which of the following statements pertaining to his policy is CORRECT? A) The company has a right to raise or lower the premium on the basis of its investment earnings. B) Any adjustments made on the policy will have retroactive effects on the policy's provisions. C) Decreasing the premium shortens the premium-paying period. D) Upon showing evidence of insurability, Patrick can increase the face amount of his policy.
Adjustable life is a whole life policy with adjustable features. Premiums may be increased or decreased at the policyowner's request, as can the face amount of the policy (usually subject to evidence of insurability). None of the changes made in an adjustable life policy has any retroactive effect on any of the provisions; adjustments apply only to the future. Increasing the premiums could lengthen the coverage period or shorten the premium-paying period. Decreasing the premiums reduces cash values, shortens the protection period, or lengthens the premium-paying period.
Which of the following scenarios regarding individual retirement accounts (IRAs) is NOT correct? A) June has accumulated $30,000 in her traditional IRA. At age 55, she withdraws $2,500 to take a vacation. She will have to include the $2,500 in her taxable income for the year and pay a $250 penalty. B) Ben, age 72, has a traditional IRA. If he does not take at least the minimum required distribution for the current year a 50% excise tax will be assessed on the amount that should have been withdrawn. C) Walter is age 60. He may take a distribution from his traditional IRA without having to worry about an early withdrawal penalty. D) Peter is currently employed, but his wife, Mary, is not. Since Mary has no earned income that she can contribute to a traditional IRA, Peter can set up a joint IRA account for the two of them.
Answer: D For married couples, an individual IRA account must be set up for each person, even if only one spouse is working. Separate IRA accounts could be set up for Peter and Mary, but not a joint account. All of the other answer choices involve correct scenarios.
Susan, age 52, withdrew $5,000 from her traditional individual retirement account, which consisted entirely of pretax contributions, to purchase her first home. What are the tax consequences? A) Susan will not be assessed a 10% penalty if she pays back the funds within 60 days. B) Susan will not be assessed the 10% penalty on her early withdrawal. C) Susan must pay a 10% penalty on the withdrawal. D) Susan must pay a 10% penalty plus income tax on the withdrawal.
Answer: B With few exceptions, any distribution from a traditional IRA before age 59½ will be subject to income tax and a 10% penalty. However, up to $10,000 may be withdrawn before age 59½ to pay for the purchase of a first home without being assessed the 10% penalty.
An eligible applicant for Social Security disability benefits must meet all of the following qualifications EXCEPT: A) be younger than age 65. B) enjoy a fully insured status under the Social Security program. C) be unable to engage in gainful work for at least five months before the benefit payout. D) have had surgery within 30 days before applying for benefits.
Answer: D An eligible applicant for Social Security disability benefits must be younger than age 65 (since all benefits paid after age 65 are classified as retirement benefits), enjoy a fully insured status, and be unable to engage in gainful work for at least 5 months before the start of the benefits.
All of the following statements about Social Security retirement benefits are correct EXCEPT: A) The normal retirement age for receiving Social Security benefits will gradually increase from age 65. B) Fully insured workers are eligible for full retirement income benefits beginning at age 62. C) Earnings are permanently reduced for individuals who retire early and receive benefits. D) Greater benefits are available for individuals who delay retirement beyond their normal retirement age.
Answer: B Fully insured workers are eligible for full retirement income benefits at their full retirement age. Permanently reduced benefits are available from age 62 for those who elect to retire early and draw benefits; slightly greater benefits are available for those who delay retirement beyond age 65. Because of longer life expectancies, the normal retirement age will gradually increase.
Sara purchased an IRA in 1989 and over the years has paid a total of $70,000 into the contract, of which $20,000 were nondeducted, after-tax contributions. Now age 65, Sarah is retiring and plans to begin receiving systematic distributions from the IRA over her 20-year life expectancy. She expects to receive $600 per month under this distribution plan. Of the $7,200 she will receive annually from this annuity, how much will represent tax-free income? A) $7,200.00 B) $1,000.00 C) $0.00 D) $2,088.00
Answer: B Nondeducted (after tax) contributions are recovered tax free. Under a systematic distribution program, the tax-free recovery is spread over the individual's 20-year life expectancy. Accordingly, $1,000 is recovered tax free each year.
Joni is covered under a dental insurance plan that requires her to annually pay the first $200 of dental expenses (other than routine semi-annual examinations and cleanings, which are covered in full), at which point the plan reimburses her for 80% of the cost of routine care. Based only on this information, Joni is most likely covered under a(n): A) comprehensive plan. B) capitation plan. C) dental health maintenance organization. D) exclusive provider organization. Your answer, comprehensive plan., was correct!.
Most commonly provided by commercial insurance companies, comprehensive plans operate much like major medical health insurance plans. Though routine examinations and cleanings may be covered in full, other routine care is covered only after the insured satisfies an annual deductible. Insureds are also required to pay for a percentage of covered care through the plan's coinsurance provision.
What is the MAXIMUM number of days of skilled nursing facility care for which Medicare will pay benefits? A) 75 days. B) 100 days. C) 25 days. D) 60 days.
Your answer, 100 days., was correct!. Part A covers the costs of care in a skilled nursing facility as long as the patient was first hospitalized for three consecutive days. Medicare will cover treatment in a skilled nursing facility in full for the first 20 days. From the 21st to the 100th day, the patient must pay a daily copayment (up to $97 per day in 2000). There are no Medicare benefits provided for treatment in a skilled nursing facility beyond 100 days
The term "blanket health insurance" refers to what type of insurance? A) Individual health. B) Group health and life. C) Group accident and health. D) Individual life and health.
Your answer, Group health and life., was incorrect. The correct answer was: Group accident and health. "Blanket health insurance" is a type of group accident and health insurance. It can be issued to groups such as common carriers, educational institutions, volunteer groups, and sports teams. Policies must contain provisions similar to those found in other group health insurance policies.
Which of the following persons could qualify for coverage under the Connecticut Health Reinsurance Association? A) Vicky, who moved to Connecticut five years ago after college. B) Lisa, 19 years old, who lives near her aged parents so she can care for them on weekends. C) Mark, a 24-year-old, full-time college student. D) Jerry, a 70-year-old consultant in a small engineering firm.
Your answer, Mark, a 24-year-old, full-time college student., was incorrect. The correct answer was: Vicky, who moved to Connecticut five years ago after college. Persons who are eligible for coverage under the Connecticut Health Reinsurance Association are Connecticut residents under 65 years of age; their spouses; their unmarried, dependent children under 19 years of age; and any other unmarried, dependent children under 19 years of age who live with the applicant in a parent-child relationship. A dependent child can be up to 23 years old if he is a full-time student attending an accredited college or university.
Tom is covered under Medicare Part A. He spends 1 week in the hospital for some minor surgery and returns home on July 10. It was his first hospital stay in years. Which of the following statements is CORRECT regarding his Medicare coverage? A) After Tom pays the deductible, Medicare will pay 100% of all covered charges. B) Medicare will pay benefits, but Tom must make a daily copayment. C) Medicare will not cover Tom's hospital expenses because he was not hospitalized for 10 consecutive days. D) After Tom pays the deductible, Medicare will pay 80% of all covered charges.
Your answer, Medicare will pay benefits, but Tom must make a daily copayment., was incorrect. The correct answer was: After Tom pays the deductible, Medicare will pay 100% of all covered charges. Medicare pays 100% of covered services for the first 60 days of hospitalization after the deductible is paid. Reference
Which of the following statements regarding the medical reimbursement benefit available in some individual disability income policies is CORRECT? A) The benefit is a percentage of the monthly income benefit. B) The benefit is paid for a disabling illness. C) The benefit is only paid if the insured is still able to continue working. D) The benefit is paid in addition to other benefits under the policy.
Your answer, The benefit is paid in addition to other benefits under the policy., was incorrect. The correct answer was: The benefit is a percentage of the monthly income benefit. The medical reimbursement benefit is a percentage of the income benefit specified in the policy. It is only paid for injuries and in lieu of other benefits under the policy.
A business disability buy-out insurance plan may include an "elective indemnity." This feature can be used to: A) reimburse other business owners or partners for the insured's loss of services to the business. B) postpone payment of the benefit to the insured. C) pay a lump-sum death benefit to the insured's family. D) enable the business owners to add other owners to the policy.
Your answer, enable the business owners to add other owners to the policy., was incorrect. The correct answer was: postpone payment of the benefit to the insured. Under the elective indemnity provision, the owners can elect to take either periodic payments or postpone the benefit until it is determined that the disabled owner will not recover sufficiently to return to work, thereby postponing the decision regarding the sale of the disabled owner's share of the business to the other owners.
Many disability buy-out plans are characterized by all of the following EXCEPT: A) option to have benefits paid in periodic installments. B) option to have benefits paid in a lump sum. C) relatively short elimination periods. D) requirement that the nondisabled owners purchase the disabled owner's share of the business.
Your answer, requirement that the nondisabled owners purchase the disabled owner's share of the business., was incorrect. The correct answer was: relatively short elimination periods. The elimination period for business disability buy-out plans is generally longer than that for individual plans and may be as long as 2 years. Many plans include the option to have benefits paid either periodically or in a lump sum at the end of a specified period.