wekk 3 review
Medicare supplement insurance policies supplement coverage on which Medicare Part? Medicare Part C Medicare Part A only Medicare Parts A, B and C Medicare Parts A and B only
Medicare Parts A and B only
All other factors being equal, which of the following applicants can expect to pay the lowest premium for a given face amount of life insurance protection? Pete, a preferred risk Carl, a substandard risk Shaun, whose application was declined
Pete, a preferred risk
In conjunction with the sale of a long-term care insurance policy, the policy buyer must be given all of the following EXCEPT: a "Long-Term Care Insurance Personal Worksheet" an outline of coverage information about California's HICAP program "Notice Regarding Replacement of Accident and Sickness or Long-Term Care Coverage"
"Notice Regarding Replacement of Accident and Sickness or Long-Term Care Coverage"
How long is the typical permanent life insurance policys free-look period? 30 days 5 days 10 days 15 days
10 days
jack bought a life insurance policy that will provide a lump-sum death benefit plus a ten-year stream of income should he die before a specified date. Five years after purchasing the policy, Jack died. Beginning with the date of his death, the policy began paying a level monthly benefit to his family for ten years. What type of policy did Jack buy? 10 year family maintenance policy 10 year family income policy survivorship life insurance policy
10 year family maintenance policy
COntributory plans typically require what minimum percentage of eligible employees to participate? 50% 75% 100% 80%
100%
How long is the typical elimination period of a business overhead expense (BOE) policy? 18 to 24 months 15 to 60 days 7 days 90 to 180 days
15 to 60 days
All of the following statements about term life insurance are correct except: A small cash value gradually accumulates while the policy is in force It pays a benefit only if the insured dies during the specified period It offers protection for a specified, limited period
A small cash value gradually accumulates while the policy is in force
How does a tort differ from a contract? A tort arisies through the violation of others rights or breach of duties owed to them A tort creates a consensual legal obiligation between parties A tort creates a legal relationship between parties a tort arises by agreement between the parties
A tort arisies through the violation of others rights or breach of duties owed to them
All of the following statements about life insurance living benefits riders or provisions are correct EXCEPT: they provide access to the policys death benefit while the insured is alive there are two basic types if they are used, the net death benefit paid to beneficiaries is reduced in most cases Accelerated benefits are payble to insureds who require hospitalization for any reason
Accelerated benefits are payble to insureds who require hospitalization for any reason
Regarding a group life insurance policy issued in California, which one of the following statements is correct? The policy must cover at least 50 employees. If the employer and employees pay the premium, no more than 75 percent of employees can participate. All employees or all those of a class of employees must be insured. Coverage amounts are based on individual selection.
All employees or all those of a class of employees must be insured
Regarding a group life insurance policy issued in California, which one of the following statements is correct? The policy must cover at least 50 employees. If the employer and employees pay the premium, no more than 75 percent of employees can participate. All employees or all those of a class of employees must be insured. Coverage amounts are based on individual selection.
All employees or all those of a class of employees must be insured.
Which statement about credit disability insurance is correct? It pays the flat benefit amount over the policy period The benefit period is the same as the loan period It covers the risk of being disabled and unable to loan money The policy repays the principle amount, but not any interest
The benefit period is the same as the loan period
Which of the following statements correctly describes the tax treatment of life insurance death benefit settlement options other than lump-sum payment? The death benefit principsl of every settlement option payment income tax free but the interest earnings are taxable income to the beneficiary in the year earned The death benefit principsl of every settlement option payment is taxable income to the beneficiary but the interest earnings are income tax free
The death benefit principsl of every settlement option payment income tax free but the interest earnings are taxable income to the beneficiary in the year earned
All the following statements regarding apparent authority are correct EXCEPT: A third party reasonably believes that the producer has it based on the reasonable statements and actions by the insurer and agent. The insurer is not liable for an agent's acts when he or she is acting under apparent authority. The insurer does not intend it. The agent's contract does not create it.
The insurer is not liable for an agent's acts when he or she is acting under apparent authority.
What happens if a person submits an insurance application without the first premium? The applicant has made a counteroffer. The applicant made an offer to the insurer. The insurer must make an offer to the applicant. The insurer must make a counteroffer.
The insurer must make an offer to the applicant.
All the following statements about the net premium for traditional life insurance policy are correct EXCEPT: The net single premium for traditional life insurance policy is the amount actually charged to the policy owner who wants to purchase the policy with a single premium payment the net premium reflects two of the three premium factor mortality and interest calculating the net single premium is the first step in calculating the gross premium charged to the policyowner
The net single premium for traditional life insurance policy is the amount actually charged to the policy owner who wants to purchase the policy with a single premium payment
Which statement correctly describes a deferred compensation plan? They are nonqualified retirement plans that allow that allow executives to delay receiving current compensation until a future time they are qualified retirement plans only available to executives they are qualified retirement plans that let employees avoid taxes
They are nonqualified retirement plans that allow executives to delay receiving current compensation until a future time
If sam makes a a full or partial withdrawl from his deferred annuity before the contract annuities, which of the following statements applies? the taxable portion of the withdrawal is determined after calculating the exclusion ratio Withdrawls are tax free up to Sams Investment in the contract, after which all subsequent withdrawls are fully taxable as a distribution of gain Withdrawls are fully taxable until they equal the contracts gain, after which all subsequent withdrawls are tax free
Withdrawls are fully taxable until they equal the contracts gain, after which all subsequent withdrawls are tax free
ALl of the following types of insurnace involve a personal contract except: a life insurance policy an automobile policy a disability income insurnace policy a medical expsense insurnace policy
a life insurance policy
Lucy is applying for an individual health insurance policy and discloses that she is diabetic, which is considered which of the following? a critical hazard a physical hazard a moral hazard a morale Hazard
a physical hazard
Which of the following correctly describes the basic tax treatment of deferred annuity death proceeds paid out before the contract is annuitized? the full death benefit is taxable a portion of the death benefit, essentially representing the interest earned by the annuity is taxable the full death benefit is tax free a portion of the death benefit, essentially representing the sum of premiums paid into the annuity is taxable
a portion of the death benefit, essentially representing the interest earned by the annuity is taxable
Jones is the policyowner and insured of a life insurance policy that contains a standard suicide provision. He commits suicide 18 months after the policy was issued, Jones's beneficiary will get which of the following from the insurer? the full death benefit nothing a return of premiums paid, plus interest a return of the premiums paid only
a return of premiums paid, plus interest
Jake owns one life insurance policy, but has several different individual health insurance policies covering disability, medical expenses, and dental care, respectively. What is the reason for having multiple policies? Commercial insurance companies and managed care service providers offer health insurance coverage Requirements for individual and group plans vary widely, and states still mainly control and issue the provisions of individual health plans a single health insurance policy cannot cover all health risks
a single health insurance policy cannot cover all health risks
The Royale Insurance Company, domiciled in Toronto, Canada, transacts business legally in New York. In New York, Royale is classified as a(n): unauthorized insurance company foreign insurance company domestic insurance company alien insurance company
alien insurance company
which statement is correct about the waiting period in a group health insurance plan? all potential participants must have the same wating period the waiting period begins when the probationary period ends A waiting period is the same as an elimination period
all potential participants must have the same wating period
Which statement regarding life insurance accelerated benefits is correct? the insured must use these funds only for medical care accelerated benefits are payable anytime the insured requires hosptalization an accelerated benefit rider pays out part or all of the policy face value while the insured is still living
an accelerated benefit rider pays out part or all of the policy face value while the insured is still living
medical expsense insurance that lets the insured get heath care from an unrestricted group of providers is called? any provider coverage fee-for-service coverage benefit schedule coverage comprehensive care coverage
any provider coverage
A fixed deferred annuity that has a guaranteed interest rate of 3 percent and a current declared rate of 5 percent can adjust the current declared rate any time after the initial rate period never only if the current rate drops to the guarenteed rate of 3 percent only every two years
any time after the initial rate period
When can a waiver of premium rider be added to a life insurance policy? any time after the policy is issued, subject to a maximum age stipulated in the policy up to six months after the policy has been issued, regardless of age only when the policy is issued up to one year after the policy is issued, regardless of age
any time after the policy is issued, subject to a maximum age stipulated in the policy
In life insurance, for how long must insurable interest exist? Insurable interest must exist only at the time the applicant enters into a life insurance contract. at the inception of the policy throughout the term of insurance coverage at the time of the claim
at the inception of the policy
According to California's Insurance Information and Privacy Protection Act, under what circumstance(s) does an insurer have to obtain authorization to release personal information? to inform a person of a medical problem of which he or she may not be aware in the course of detecting criminal activity in connection with an insurance transaction when determining a person's eligibility for an insurance benefit or payment before disclosing privileged information about a person
before disclosing privileged information about a person
A producer owes a fiduciary duty to: the customer only the insurer only neither the insurer nor the customer both the insurer and the customer
both the insurer and the customer
Which is the amount that is paid for death under an accidental death and dismemberment (AD&D) insurance policy? indemnity amount principal sum capital sum primary amount
capital sum
What do covered employees receive to show they have coverage under a group life insurance policy? certificate of insurance certificate of enrollment copy of the master plan
certificate of insurance
Which statement is NOT correct about the reinstatement of health insurance policy? claims related to illness ae covered immediately reinstatement takes effect when the insurer notifies the insured a reinstated policy covers accidents immediately
claims related to illness ae covered immediately
Hannah participates in her company's retirement plan, which provides for 100 percent vesting after four years with no vesting prior to that. What is this type of vesting schedule called? graduated vesting accelerated vesting qualified vesting cliff vesting
cliff vesting
The use of a permanent life insurnace policy as security for obtaining a bankloan is done through an: partial surrender policy loan absolute assignment collateral assignment
collateral assignment
The purpose of policy exclusions is to specifiy: hobbies that the policy does not cover occupations that the policy does not cover conditions that the policy does not cover illnesses that the policy does not cover
conditions that the policy does not cover
If an employer sets up a profit-sharing plan for its employees, which statement is correct? the employer must make substantial and recurring contributions for the plan to maintain its qualified status contribution amounts are unlimited contributions to the plan are directed into a single account covering all plan participants plan participants may contribute to the plan
contributions to the plan are directed into a single account covering all plan participants
The main purpose for errors and omissions insurance (E&O) is to: provide legal protection to the producer who is charged with willfully engaging in an unfair trade practice allow the producer to be less diligent in complying with insurance sales disclosure requirements cover damages that arise due to services a producer non-willfully failed to render pay for an insurance company executive to meet with a policyowner to correct an error made by the producer during the sales process
cover damages that arise due to services a producer non-willfully failed to render
Anne, a life insurance applicant, wants to change an answer that she gave on the application. She should do which one of the following? cross out and initial the incorrect entry, and enter the correct information next to it erase the orginal entry and enter the correct information attach a note to the application explaining what she intended to anwser
cross out and initial the incorrect entry, and enter the correct information next to it
Which of the following requires monthly fixed premium payments of a specified amount, produces a predetermined amount of income upon annuitization, and has traditionally been used to supplement retirement income?immediate annuity single-premium deferred annuity fixed premium deferred annuity flexible premium deferred annuity
deferred annuity fixed premium
In addition to mandatory and optional provisions, health insurance policies have other provisions that: detail claims and policy renewal information define the full scope of a policy's features, benefits, and limitations establish premiums based on risk, age, and experience define the nature of the risks covered by the policy
define the full scope of a policy's features, benefits, and limitations
In California, all of the following are considered transacting insurance for which a license is required EXCEPT: determining premium rates for specific classes of insureds soliciting applications for insurance effecting and placing insurance contracts paying an insurance claim
determining premium rates for specific classes of insureds
Generally speaking, which of the following most correctly describes the taxation of ROTH IRA qualified distribution? distribution are generally subject to income tax distributions are generally tax free distributions may or may not be subject ti income tax, depending on the IRA owners income level distributions may or may not be subject to income tax, depending on whether or not the IRA owner tax-deducted the IRA's contributions
distributions are generally tax free
All the following statements regarding life insurance policy dividends are correct except? Dividends are generally received income tax free interest earned on dividends left with the insurer is taxable dividends are guarenteed
dividends are guarenteed
An insured's medical expsense plan requires the insured to pay the medical care provider for each service rendered. the insurer then reimburses the insured. On what basis are benefits paid? fee-for-service pre-paid specified comprehensive
fee-for-service
The activities a producer performs to support the insurance company in learning all it can about the applicant when seeking applications for insurance are generally called: fiduciary process field underwritting agency development due diligence
field underwritting
When calculating the ongoing income that surviving family will need after an insured dies, the insured must consider all but? family medical expsenses utilities housing expsenses final funeral expsenses
final funeral expsenses
the illegal occupation provision protects the insurer by letting the insurer deny a claim that arises: from an insureds illegal activity when the insured is out of his or her home state from an event not related to the insureds occupation
from an insureds illegal activity
the other insurance with other insurers provision often applies whrn the insured? has coverage from previous employers health plans has coverage from both individual and group plans has coverage from several current employers has coverage from a states workers compensation program
has coverage from a states workers compensation program
all of the following statements regarding a variable annuity is assumed interest rate are correct except: if the actual return is greater than the AIR, payments will decrease The value of each annuity payment is directly affected by changes in the AIR Annuitized payments under a variable annuity are based on the AIR and the value of the contracts annuity units
if the actual return is greater than the AIR, payments will decrease
Medical expsense insurance policies are what type of contract? valued contract commutative contract indemnity contract
indemnity contract
The purpose of Californias HICAP program is to offer which of the following? information and advice about heath care to those age 65 and older long term community based care services for those age 65 and older protection of health insurance policies aginist insurer insolvency custom-designed medicare supplement policies
information and advice about heath care to those age 65 and older
Unlike a supplemental major medical plan, a comprehensive major medical plan: has low benefit limits offers limited covergae enhances coverage from a basic medical expsense plan is not combined with other medical expsense insurance
is not combined with other medical expsense insurance
Ralph,Jerry, and Paul are primary and equal beneficiaries of the $600,000 insurance policy on the life of their mother, Judy. Ralph dies before his mother. He leaves two children, Tim and Hal. If Judy's life insurance policy designates the death benefit be paid "per stirpes" how will the insurer distribute the policy benefit Ralph's $200, 000 share will pass equally to his two children when Judy dies, the surviving siblings, Jerry and Paula, will each receive $200,000 jerry and paula will each receive $300,000 tim and haul will divide the death benefit between them
jerry and paula will each receive $300,000
Which of the following settlement options includes a life contingency? life income with period certain option period certain-only option fixed amount option fixed period option
life income with period certain option
How may a person eligible for Medicare avoid automatic enrollment in Part B? Notify the Department of health and Human Services that the person wants to opt out withdrawl from social security coverage notify the social security administration that the person wants to opt out cancel part A
notify the social security administration that the person wants to opt out
Regarding policy dividends, which type of insurnace is used with the so-called 5th dividend option? one year permanent insurnace extended term insurnace renewable term insurnace one-year term life insurance
one-year term life insurance
which type of services do long-term care insurance policies NOT cover? respite care services physician and surgical care for insureds in nursing homes nursing home and home health-care services adult day-care services and residential community living services
physician and surgical care for insureds in nursing homes
all about adjustable life insurance are correct, but? the policy death benefit may be increased by increasing the premium policy premiums can be changed up or down whenever the policy owner wants to do so changing the premium will change the policys future cash value growth
policy premiums can be changed up or down whenever the policy owner wants to do so
ERISA does not regulate group health insurance plans with respect to? claims procedures and appeals promoting the sponsors best interests accountability information disclosure
promoting the sponsors best interests
Statements made on a life insurance application are considered? representations warrenties uncondtiional promises conditional promises
representations
All of the following are part of a producer's responsibilities to an applicant EXCEPT: recommend insurance products that are suitable for the customer's needs disclose all important information about a proposed policy research other insurance companies' insurance products if requested by the applicant avoiding replacing an insurance policy unless doing so will clearly benefit the applicant
research other insurance companies' insurance products if requested by the applicant
alice owns a LTC policy. her return of premium option allows her to have a portion of the premium if: returned if the amount of her claims in one year is less than the annual premium paid to her estate or a named beneficiary when she dies refunded is she returns the policy within 30 days of the issue date
returned if the amount of her claims in one year is less than the annual premium
In addition to the fiduciary responsibility they have with all customer premiums and assets, producers are expected to do all the following EXCEPT: make sure all product recommendations are suitable for the customer disclose all pertinent information concerning a proposed policy seek opportunities to replace existing policies with newer products avoid all forms of rebating
seek opportunities to replace existing policies with newer products
Although the employer sets the eligibility standards for participation in its group health insurance plan, the insurer alone: sets the minimum participation standards sets the waiting period selects the benefits sets the group membership
sets the minimum participation standards
What is the maximum amount of time most states allow insurers to delay paying cash surrender values? one week one month six months nine months
six months
Life insurance policy proceeds are protected from the claims of creditors due to the policys spindthrift clause insuring clause incontestability clause settlement options provision
spindthrift clause
Section 457 plans are qualified retirement plans that are reserved for employees of which type of organization? educational organizations charitable organizations state and local governement units religious organizations
state and local governement units
In a collateral assignment, policyowners may do all the following; EXCEPT: pay the premiums surrender the policy change beneficiaries borrow additional money against the cash value as long as enough remains to cover the collateral assignment
surrender the policy
What is the name of the period during which premium funds are paid out of an annuity contract in the form of periodic income payments? the annuity payout the benefit period the accumulation period the annuity payout period
the annuity payout period
which statement is correct about the need for long-term care insurance? The annual costs for long term care services are similar across the country the costs of long-term care services are often more than one person or couple can afford the cost of long term care services is diminishing with healthier lifestyles
the costs of long-term care services are often more than one person or couple can afford
in california, all of the following must be specified in an insurance contract except: the parties to the contract the risk insured against the premium the financial rating of the issuing insurer
the financial rating of the issuing insurer
All of the following statements about indexed life insurance are correct EXCEPT: there is both a whole life ans a universal life version of indexed life insurance the insured bears all of the investment risk with an indexed life insurance policy indexed universal life insurance offers potentially higher rates of return than those offered by traditional life insurance policies
the insured bears all of the investment risk with an indexed life insurance policy
Which of the following statements about tax treatment of funds received through a qualified viatical settlement is correct? the insured pays state income tax but no federal income tax the insured pays capital gains but no federal or state income tax the insured pays no federal income tax but may have to pay state income tax the insured pays no taxes in any form
the insured pays no federal income tax but may have to pay state income tax the insured pays no federal income tax but may have to pay state income tax
In a participating life insurance policy, the insurance policy, the insurance company pays the policy owner a dividend out of which of the following? the insureds divisable surplus the companys cash reserves set amounts prescribed in the policy
the insureds divisable surplus
The cancellation provision allows an insurer to cancel a policy at any time with 45 days' notice. This 45-day notice requirement also applies when: the insurer assigns a new agent to the insurer the insurer changes location or mailing address the insurer files for bankruptcy the insurer refuses to renew the policy or changes the premium
the insurer refuses to renew the policy or changes the premium
under the other insurance with other insurer provision, what happens to any premiums the insured paid in excess of those needed for coverage? the insurer returns them the insurer credits them to future coverage the insurer keeps them
the insurer returns them
All the following statements about variable annuity sub-accounts are correct EXCEPT: the insurer selects the variable sub-accounts to which the contract owners premiums are allocated if sub-accounts perform well, the contract owner is likely to realize a greater investment growth than possible with a fixed annuity variable annuities today may offer up to 20 or 30 different sub-accounts
the insurer selects the variable sub-accounts to which the contract owners premiums are allocated
which statemetn about the taxation of qualified long-term care insurance policies is NOT correct? the limit of the deductible premium decreases with the insureds age. benefits paid to a chronically ill insured are not taxed, up to certain limits the limits on tax free benefits are annually adjusted
the limit of the deductible premium decreases with the insureds age
A whole life insurance policy matures or endows when: the premiums the owner has paid equal the policys face amount the premiums the owner has paid equal the policys cash value the policys cash value equals its loan value the policys cash value equals its face amount the premiums the owner has paid equal the policys cash value the policys cash value equals its loan value the policys cash value equals its face amount
the policys cash value equals its face amount
Which statement is correct about government health insurance plans? they are a right of citizenship they pay tax-free benefits they are available only to state or federal employees they are available to individuals and groups
they are available to individuals and groups
why are the premiums that an employer pays for group medical insurance NOT subject to social security taxes or medicare taxes? they are employee benefits they are business expsenses they are not wages they are qualified medical expenses
they are not wages
Why would a large manufacturer choose to self-insure rather than buy an insurance policy from an insurance company? to shelter company cash from federal taxation to avoid having to comply with state insurance laws dealing with employee benefits so they can pick and choose which losses they cover to save insurance premiums by paying relatively minor losses out of company funds
to save insurance premiums by paying relatively minor losses out of company funds
Which of the following correctly identifies qualified educational expenses that can be covered under a Section 529 prepaid tuition plan? tuition and mandatory fees only tuition only tuition, mandatory fees, room and board, and books tuition, mandatory fees, and room and board only
tuition and mandatory fees only
Which of these assesses the need for and appropriateness of health care services for members or subscribers? blue cross and blue sheild plans major medical insurance plans ultilization reviews
ultilization reviews
HMOS control costs through which of the following? 20% deductible for health care provided within the network no deductibles for health care provided outside the network use of network health care providers and minimal copayments minimal deductible for health care provided within the network
use of network health care providers and minimal copayments
The requirement that an insurable interest must exist when life insurance is purchased is intended to prevent people from doing which of the following? using life insurance to fund future cash needs overusing life insurance using life insurance as a speculative insvestment on another persons life designating an inelgible person as the policy beneficiary
using life insurance as a speculative insvestment on another persons life