Simulator
Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of
$10,000
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
How long is the typical free look period for Long Term care insurance policies?
30 days
According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid?
31 days
An insurer may normally delay the payment of a cash value loan or surrender for up to
6 months
How long does an individual have to "rollover" funds from an IRA or qualified plan?
60 days
P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?
A recurrent disability
What is NOT included in an annuity contract?
AD&D rider
Which provision is NOT a requirement in a group life policy?
Accidental
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)
Accidental Death and Dismemberment rider(AD&D)
A policyowner may generate taxable income from which of the following Dividend Options?
Accumulation at Interest
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Adhesion
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?
Aleatory
What type of employee welfare plans are not subject to ERISA regulations?
Church plans
K applies for a health insurance policy on herself and submits the initial premium with the application. She is given a receipt by the producer stating that coverage begins immediately if the application is approved. What kind of receipt was used?
Conditional
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What Policy does he need?
Decreasing term policy
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 has 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
What policy provision prohibits an insurance company incorporating external documents into an insurance policy?
Entire contract
D owns a Whole Life policy that was purchased 10 years ago. If the premium payments suddenly stop and D takes no additional action, which Nonforfeiture Option will the insurer likely proceed with?
Extended Term
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
Guaranteed insurability rider
X is insured with a disability income policy that provides coverage until age 65. This policy allows the insurer to change the premium rate for the overall risk class assigned. Which of these renewability features does this policy contain?
Guaranteed renewable
What retirement plans can be started by an employee, even if another plan is in existence?
IRA
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 would be forfeited
Which of these is NOT a reason for purchasing life insurance on the life of a minor?
If both parents were to die, it would provide death benefits to the child
The _ clause identifies which losses resulting from an accident or sickness are insured by the policy.
Insuring
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT
Interest Only
What arrangement allows one to bypass insurable interest laws?
Investor-Originated Life Insurance
Which of these arrangements allows one to bypass insurable interest laws?
Investor-Originated Life Insurance
What action will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy?
Issue the policy with an altered Time of Payment of Claims provision
T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?
Life Annuity with Period Certain
Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
Life Income
A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value?
Life settlement contract
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
Which of these is considered a mandatory provision?
Payment of Claims
An individual health insurance policy is REQUIRED to contain a
Payment of Claims provision
Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?
Payor clause
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
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
What is an example of a nonforfeiture option?
Reduced Paid-Up option
The provision that can be used to out an insurance policy back in force after it has lapsed due to nonpayment is called:
Reinstatement
R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?
Residual Disability
What is Old Age and Survivors Health Insurance (OASDHI) also known as?
Social Security
Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary?
Split-Dollar plan
A _ rider may be used to include coverage for children under theirs parents' life insurance policy
Term
Which of these life insurance riders allows the applicant to have excess coverage?
Term Rider
Which of these life insurance riders allow the applicant to have excess coverage?
Term rider
What is a valid TN regulation for referral fees?
The Commissioner may establish by rule a maximum amount for each referral
What is the underlying concept regarding level premiums?
The early years are charged more than what is needed
What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled?
Waiver of Premium rider
A Return of Premium life insurance policy is
Whole life and Increasing term
A Return of Premium life insurance policy is:
Whole life and Increasing term
Which of these is an element of a variable life policy?
a fixed, level premium
The Consideration clause in a life insurance contract contains what pertinent information?
amount of premium payments and when they are due
Group life insurance policies are generally written as
annually renewable term
Which type of contract liquidates an estate through recurrent payments?
annuity
In order to establish a Health Reimbursement Arrangement (HRA), it must:
be established by the employer
This type of deductible provision states that should more than one family member be involved in a common accident, or suffer the same illness, only one individual deductible amount shall be applied
common accident deductible
Major Medical policies typically
contain a deductible and coinsurance
An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be
converted to an individual permanent policy at an individual rate
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
A variable insurance policy
does not guarantee a return on its investment accounts
Under a trustee group life policy, who would be eligible for a certificate of coverage?
employee
All these characteristics of an Adjustable Life policy EXCEPT:
face amount can be adjusted using policy dividends
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
level term
In an individual retirement account (IRA), rollover contributions are
not limited by dollar amount
What benefit does the Payor clause on a Juvenile Life policy provide?
premiums are waived if payor becomes disabled
A retirement plan that sets aside part of the company's net income for distributions to qualified employee's is called a
profit-sharing plan
When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?
recurrent disability
With Optionally Renewable Health policies, the insurer may
review the policy annually and determine whether or not to renew it
What type of life insurance are credit policies issued as?
term
A contract owner terminates an annuity before the income payment period begins. The owner will then receive
the current contract surrender value
Whole Life insurance is sometimes referred to as "Straight Life". What does the word "Straight" indicate when using this phrase?
the duration of premium payments
Who is normally considered to be the owner of a 403b sheltered annuity?
the employee
In Tennessee, the definition of "individual" may include which of the following?
the individual's legal representative
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
What is the excise tax rate the IRS imposes on individuals aged 70.5 or older who do not take the required minimum distributions form their qualified retirement plan?
50%
what should an insured do if the insurer does not send claim forms within the time period set forth in a health policy's Claims Forms provision?
Submit the claim in any form
What is the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party?
Subrogation
What statement best defines usual, customary and reasonable charges?
The max amount considered eligible for reimbursement by an insurance company under a health plan
A _ _ Life policy combines investment choices with a form of Term coverage
Variable Universal
At what point does an informal agreement become a binding contract?
When consideration is provided by one of the parties to the contract
An agent give 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
A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as:
a representation
What is a warranty?
a statement that is assured to be true in every aspect
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional Whole Life coverage at specified times
A policy loan is made possible by which of these life insurance policy features?
cash value provision
When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?
change of occupation provision
The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a
closed panel
Who reimburses its insured for covered medical expenses?
commercial insurers
Who reimburses its insureds for covered medical expenses?
commerical insurers
What is the purpose of the USA Patriot Act?
detect and deter terrorism
What is a statement does NOT accurately describe tax treatment or premiums and benefits Accident & Health insurance?
disability income policy premiums are tax-deductible
A characteristic of Preferred Provider Organizations (PPO) would be:
discounted fees for the patient
T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company
does NOT have to make any further payments
M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?
earned, but unpaid benefits
Consumer reports requested by an underwriter during the application process of a health insurance can be used to determine:
probability of making timely premium payments
Which provision allows a portion of any used medical benefits to be restored following a particular amount of benefit has been used, or after the policy has been in effect for a particular period of time?
restoration of used benefits
What does a 401k generally provide its participants?
salary-deferral contributions
P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?
sign an enrollment card
What statement would be incorrect about the classification of applicants
substandard applicants are occasionally declined by underwriters
What is Aleatory?
the amount the insured will pay in premiums is unequal to the amount that the insurer will pay in the event of a loss.
The investment gains from a Universal Life Policy usually go towards
the cash value
The Consideration clause in a life insurance policy indicated that a policyowner's consideration consists of a completed application and
the initial premium
A disability elimination period is best described as a
time deductible
The free-look provision begins
upon receipt of the policy by the policyowner
ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has
waived one of its legal rights
What is NOT true about a Tax Sheltered Annuity?
Income derived from the TSA is received income tax-free
A 45 year-old woman won $100,000 in a scratch-off lottery ticket. She purchased an annuity that will pay her $1,500 per month beginning at age 60. Which annuity did she purchase?
Deferred Fixed annuity
The federal income tax treatment of employer-provided group Medical Expense insurance can be accurately described as:
Employee's premiums paid by the employer is tax-deductible to the employer business expenditure
What provision specifies how long a policyowner's health coverage will remain in effect if the policyowner does not pay the premium when it is due?
Grace period
J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to?
HMO
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
K's whole life insurance policy lapsed two months ago due to nonpayment. She would like to reinstate the policy. All these statements are correct about the policy's reinstatement EXCEPT
K will forfeit the right to use the automatic load provision upon reinstatement
A whole life insurance policyowner does not wish to continue making payments. Which of the following enables the policyowner to sell the policy for more than its cash value?
Life settlement contract
Comprehensive Major Medical policies usually combine:
Major Medical with basic hospital/surgical coverage
What are Equity Indexed annuities typically invested in?
S&P 500
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT
Signed HIPAA disclosure
The percentage of an individual's Primary Insurance Amount (PIA) determines the benefits paid in which the following programs?
Social Security Disability Income
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)
Straight Life annuity
What is NOT included in the policy face?
exclusions
What action should a producer take if the initial premium is NOT submitted with the application?
forward the app to the insurer without the initial premium
M completes an application for health 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 Long-term Care policy sold in TN must be
guaranteed renewable
When determining the monthly benefit amount for a disability income policy, the factor that limits the amount a prospective insured may purchase is
income
A 55 year old recently received a $30,000 distribution from a previous employers 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over?
income taxes plus a 10% penalty tax on $30,000
What actions should a producer take when submitting an insurance application to an insurer?
inform insurer of relevant information not included on the application
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
A policy of adhesion can only be modified by whom?
insurance company
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
insured
B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes?
interest only
What is the purpose of a Policy Summary?
it highlights the critical parts of the policy issued
Which of the following BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that uses the "accident means" definition?
less restrictive
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the transfer amount
What BEST describes how a PPO is less restrictive than a HMO?
more physicians to choose from
What type of renewability guarantees premium rates and renewability?
noncancellable
What best describes a short-term medical expense policy?
nonrenewable
The Notice of Claims provision requires a policyowner to
notify an insurer of a claim within a specified time
An accident policy will most likely pay a benefit for a(n)
off-the-job accident
What statement is TRUE in regards to a policy loan?
past-due interest on a policy loan is added to the total debt
