215 Practice
Which about Medicare Part A's home health care services benefit is correct?
Medicare Part A's home health care benefit covers part-time and intermittent skilled care.
Who will receive benefits under Medicare Part A hospital insurance?
Mona, who is receiving hospice care
An employee who is covered under a non-contributory defined contribution plan in which the employer contributes specified percentage of salary into each plan participant's account each year is covered under which of the following types of plans?
Money purchase plan
If Tim wants to avoid paying taxes on the interest earned on his AD&D benefits, how should he receive the benefits?
Monthly
Which type of care are HMOs NOT required to provide?
Nursing home care
All regarding heath care flexible spending accounts (FSAs) are correct, EXCEPT:
Participants may make claims against their accounts for up to six months after the end of their benefit year.
Which type of medical expense coverage may be limited to a particular form of care?
Specified
Which of the following describes why the with the surgical fee schedule approach creates problems?
Surgical fee schedules are fixed, so as surgical fee increase, the insured must pay more for surgery.
Which describes why the surgical fee schedule approach creates problems?
Surgical fee schedules are fixed, so as surgical fees increase, the insured must pay more for surgery.
The purpose of utilization review in a managed care plan is to:
develop a managed care standards for providers
Lisa, age 35, takes a $9,000 distribution from her traditional IRA to use as a down payment on her first home. What penalty tax must Lisa pay?
$0
Emily, age 48, withdrew $8,000 from her SIMPLE plan to buy a car. How much penalty tax will she owe?
$800
In health insurance plans with 'grandfather' status under the Affordable Care Act, what is the longest time that they can exclude a preexisting condition from coverage?
12 to 18 months
ABC Life Insurance Co. sells term and whole life insurance policies through agents. If it sells a policy, it must give the customer the right to examine the policy for at least how long?
14 days
What is the most common elimination period used in a disability income policies that are purchased by a company for disability buy-out purposes?
18 to 24 months
Margaret enters a skilled nursing facility after being released from the hospital. Medicare will fully cover her costs for how long?
20 days
Calculating mortality charges
2001 CSO table
Horace buys a Medicare supplement policy but decides not to keep it. How many days does he have to return it for a full refund of the premium?
30 days
In most states, if a new life insurance policy is replacing an existing policy, a "free look" period for the replacement of the policy is:
30 days
Individual long-term care policies are usually available to applicants between the ages of:
40 and 85
In general, what is the earliest age at which a person can take a distribution from a qualified plan without a tax penalty?
59 1/2
If a person receives funds directly from a qualified pension plan and intends to roll them over to an IRA. Within how many days must the rollover be completed?
60 days
Medicare Part A covers a beneficiary's hospitalization beyond the 9- days allowed in a benefit period by offering a lifetime reserve of:
60 days
A worker can choose to collect permanently reduced Social Securities benefits as early as what age?
62
Assuming they meet the age and financial dependency requirements, each parent of a deceased worker is eligible to receive Social Security survivor benefits equal to:
75 percent of the worker's PIA if two parents are eligible, or 82.5 percent of the PIA if only one parent is eligible.
Which of federal laws does NOT affect group health insurance plans?
ADEA
Which of the following requirements applies to a life insurance policy issued to a creditor-debtor group?
All eligible debtors must be insured, if the creditor pays the entire premium.
All regarding annuity death benefits are correct EXCEPT:
Annuity death benefits are income tax-free
Disability products that are marketed to blue-collar workers and manual laborers typically contain which definition of total disability?
Any occupation
At what point do insurers need to decide if insurable interest exists?
Before entering into the contract
Which of the following statements regarding key person disability insurance is correct?
Benefit payments are income tax-free
Which about maximum benefit periods in disability income policies is NOT correct?
Benefit periods in short-term disability income policies are limited to five years
Brian contributes every year to his 401(k) plan account and his employer makes matching contributions. The following are correct, EXCEPT:
Brian's taxable income will be increased by the amount that his employer contributes to his 401(k) plan account.
Delta Inc. pays the premiums on a disability buy-out policy, a business overhead policy, and a key person disability policy. For which policies can it take an income tax deduction for the premiums it pays?
Business overhead policy only
An employer plan with a maximum benefit period of 18 months would most likely be which type of insurance?
Group short-term disability plan
What must an insurer give to its group policyholders for delivery to each insured person, as proof that the person is insured?
Certificated of coverage
Usual, customary, and reasonable (UCR) fee
Determines the appropriate amount payable for a given service
Which is correct about the types of insurance sales systems?
Direct response companies sell insurance to consumers without the use of a licensed producer.
Collateral Assignment
Does not transfer or assign all rights. Rather, it makes an assignment of the policy's values only to the point necessary to secure the loan.
How do employers contribute to a medical savings account (MSA)?
Employers can contribute to MSAs under the same principles that apply to health savings accounts.
Which is NOT an unfair claims settlement practice if committed by an insurance company in FL?
Failing to promptly settle a claim for which liability is uncertain
Which is NOT a method that managed care systems use to control costs?
Financial incentives to providers for limiting care
Howard is 45 and has a modest but steady income. He wants to invest in a product that will provide him a steady, dependable monthly income when he turns 65. Which of the following products would be most suitable for Howard?
Fixed deferred annuity
A variable annuity contract owner can annuitize the account's cash value under which of the following payout options?
Fixed or variable payout option
Each year, Marco defers part of his pre-tax compensation into an account to pay health-care expenses not reimbursed by his employer's group plan. At the end of the year, he has $300 in his account, and he has until March 15 to use these funds. Which type of health savings arrangement does he have?
Flexible spending account
Which provision is NOT optional in a health insurance policy?
Grace Period
Warren is insured by a disability income policy and paid $2,500 each year in premiums until he is disabled. He now receives a $1,200 monthly disability benefit. Which statement is correct?
He cannot deduct the premium he paid but can exclude the benefits from taxable income.
Adam bought an individual income policy with a social insurance supplement (SIS) rider. If he becomes disabled and is eligible for Social Security disability benefits, what will happen?
He will recover benefits under the SIS rider while he is waiting for his Social Security disability benefits to begin.
Jake has a consumer-driven health plan. What will the plan include to pay for expenses beyond the deductible?
High-deductible health plan
Tom bought a $100,000 adjustable life insurance policy. With respect to that policy, all the following statements are correct EXCEPT:
If Tom wants to increase the amount of the death benefit by more than $50,000, he will have to buy a new policy.
An insured is injured on a construction job and cannot continue his line of work. He takes a teaching position at a vocational college, earning $2,000 a month less than his previous salary. Which policy would address his need to restore his level of income to a pre-disability level?
Income Replacement policy
An employer establishes flexible spending accounts for its employees. Which expenses will the accounts NOT cover?
Insurance policy premiums
Which is correct about long-term care insurance?
It cannot be canceled because of the insured's age
Before delivering a health insurance policy to a client, the agent alters the insuring clause in a way that he believes will benefit the insurance company. What is true about this alteration?
It is prohibited by the entire contract provision.
Jason, age 27, is single, works for a small computer company, and earns $150,000 a year. Because the company does not have any retirement plan for its employees, Jason set up and contributed to a traditional IRA this year. Which of the following statements is correct?
Jason can deduct the full amount that he contributes to his traditional IRA.
What are insurers legally required to maintain in order to guarantee the payment of insurance claims and benefits?
Legal reserves
How late in the year can a flexible spending account (FSA) participants apply their contributions for any one year?
March 15 of the following year
Which is NOT a means by which the federal government currently encourages employers to provide health care coverage for their employees?
Medical Savings Account
Which is NOT a managed care provider?
Medical expense plan (MEPs)
What was the forerunner to the health savings account (HSA)?
Medical savings account (MSA)
Which of the following statements about Medicare Part A's home health care services benefit is correct?
Medicare Part A's home health care benefit covers part-time and intermittent skilled care
Which statement about the any occupation definition of total disability and the own occupation definition is correct?
Policies with an own occupation definition of total disability are more expensive
Which of the following is NOT considered a standard life insurance nonforfeiture option?
Policy Loan
The amount of benefits that a disabled person can expect to receive from Social Security is based on which of the following?
Primary insurance amount at the time the disability occurred.
The laws of agency govern the relationship between:
Principal and agent
Before an insured is admitted to the hospital, what kind of utilization review may the insurer conduct to determine the appropriateness of the medical care?
Prospective review
Jamie is 37 years old, but her friends insist that she looks younger than her age. She applies for a health insurance policy and on the application states that she is 27. When the insurer discovers the truth, what will it probably do?
Reduce the benefits
A client's answers on an application for insurance are considered to be:
Representations
Sam and Mary both have group term life insurance. Sam's employer plan is a contributory plan, while Mary's is noncontributory. What is the difference?
Sam and his employer share premium payments, while Mary's employer pays the entire premium.
With the fixed period life insurance settlement option, the payment period is:
Selected by the policyowner or beneficiary
Which is NOT a party to the annuity?
The agent
Changes to a disability income insurance policy's benefits under the cost-of-living adjustment (COLA) rider are typically based on:
The consumer price index
In an owner-driven deferred annuity contract, what happens upon the death of the contract owner prior to annuitization if the annuitant is still alive?
The contract terminates and the death benefit is paid to the beneficiary.
The assumed interest rate (AIR) of a variable annuity is which of the following?
The expected rate of return during the annuitization period
Sally's $750,000 life insurance policy was payable to her son when she died. Based only on this information, which of the following correctly describes how that money will be treated for tax income purposes?
The full amount is income tax-free.
The exclusion ratio applies until all principal in the annuity contract has been paid out. After that, what happens?
The full amount of future annuity payments are treated as taxable income
Lynn participates in a flexible spending account established by her employer. Which statement is not correct?
The funds in the account roll over from year to year.
Which of the following would not be considered when determining the expense factor (or load) in a life insurance premium?
The interest earned on the insurer's investments
Which condition must exist for a risk to be considered insurable?
The loss must be ascertainable.
To determine how much life insurance a person needs, an agent will examine the individual's current income, assets and liabilities, goals, current expenses, and risk profile. What is this approach to determining the right amount of life insurance called?
The needs approach
Which of the following statements regarding Keogh (HR-10) qualified plans is correct?
The plan must comply with the same maximum contribution and benefit limits applicable to the other qualified plans.
Under a disability income insurance policy's insurance supplement rider, what happens to the policy's benefit payments if the disabled insured qualifies for Social Security disability benefits?
The policy rider's benefit payments are decreased or terminated.
If the insured suffers a disabling injury five days after buying a disability income policy with a 15-day probationary period, which of the following statements is correct?
The policy will cover the loss
The premiums that a policyowner pays for a universal life policy are directly credited to:
The policy's cash value
John, a life insurance policyowner, exercises an absolute assignment of the policy to his daughter, at which point she becomes:
The policyowner
Which portion of the benefit payments, if any, will be subject to taxation?
The portion representing the interest on the death proceeds is taxable.
Agent Smith is working with a married prospect who has three children. Agent Smith is using the needs approach to figure out how much insurance the prospect needs and the type of policy that is most appropriate. She must gather information about all of the following EXCEPT:
The prospect's employment history
Which statement about HMOs is NOT correct?
The provider network is limited to a town or cirty
All of the following statements about future increase option riders in individual disability income policies are correct, EXCEPT:
They allow the insured to buy additional coverage under the policy at no additional charge
Which correctly describes managed care plans such as HMOs?
They connect the financing and delivery of health care.
What would be the best advice for a 401(k) plan participant over age 50 who wants to save more towards retirement than IRS contribution rules allow for participants of all ages?
To make additional savings into her 401(k) through catch-up contributions.
When comparing her insurance company's policies to those of Zenith insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buys one from Melanie's company. What is Melanie engaged in?
Twisting
Miguel purchased a permanent insurance policy that lets him vary premium payments and adjust the death benefit over the policy's term. After owning the policy for fifteen years, the policy's cash values had grown to the point that he decided not to pay premiums for the next six months. What type of policy does Miguel own?
Universal Life
All of the following statements comparing variable life insurance (VLI) and variable universal life insurance (VUL) are correct EXCEPT:
VLI policies generally offer a wide variety of subaccounts to choose from while VUL policies are typically based on a single investment account of mixed stocks.
Which is not one of the 12 provisions that are required in all health insurance policies?
Waiver of premium provision
Your client has a universal life policy for which the target premium is $300 per month. He wants to be assured that if he becomes totally disabled the full $300 premium will be waived. What type of rider would accomplish this?
Waiver of stipulated premium rider
When would be the best time to surrender a market-value-adjusted annuity during the surrender charge period?
When current market interest rates are lower than they were when the annuity was issued.
Will's employer pays the premiums for his group disability income insurance policy. Which statement is correct about the tax treatment of the premiums and benefits?
Will cannot deduct the premiums that the company pays on his behalf
Stephan buys an individual major medical plan this year. Will his thyroid condition be covered under the plan?
Yes, because the limitations and exclusions on pre-existing conditions in individual health plans are generally prohibited
The owner of a whole life policy who qualifies for accelerated benefits under the policy's accelerated benefits provision can expect to receive:
a percentage of (but less than) the policy's death benefit
The death benefit amount under a children's term rider may be limited to a specified amount and/or:
a small percentage of the base policy's face amount
Shannon, age 52, forgot to pay the $1,000 premium for her whole life insurance policy, and the policy lapsed. She can reinstate the policy by doing all of the following EXCEPT:
apply for reinstatement before the policy matures
How is increasing term life insurance normally sold?
as a cost-of-living rider on a permanent life insurance policy
A variable annuity's purchase rate is the amount of ongoing income that can be provided by $1,000 of the contract's accumulated value. The purchase rate is based on which one of the following?
assumed interest rate (AIR)
The typical guaranteed insurability rider lets policyowners buy a specified amount of additional insurance on select policy anniversaries until a specified maximum age. The anniversaries are usually at which interval?
at three-year intervals
Social Security benefit amounts are most directly based on a worker's:
average indexed monthly earnings
Jason has owned a whole life insurance policy for seven years. If he takes a loan from the policy, the insurer
can change a fixed interest rate of up to 10 percent annually
An insurable risk is not:
catastrophic
What must the recipient pay after the Medicare Part A deductible is paid?
daily hospital coinsurance or co-payment for the 61st to the 90th day
In qualifying for Medicare coverage, care in a nursing home need NOT:
depend on the patient's ability to pay
With respect to the taxation on annuitized income payments, which of the following terms refers to the non-taxable return of basis portion of the payment?
exclusion ratio
Suppose an agent's contract with the insurer gives the agent permission to sell and solicit business for the insurer. What kind of authority does the contract grant to the agent?
express
A medical expense insurance policy that reimburses insureds for the medical services they pay for is called a:
fee-for-service plan
Insurers must keep records of their insurance transactions for how many years after the transaction was completed?
five
What unfair trade practice has a person committed if he knowingly and with intent to defraud files an insurance claim that is false?
fraud
Which action must a life insurance policyowner take to assign his or her rights in a policy to a third party?
give written notice to the insurer of the assignment
If a Roth IRA owner takes a withdrawal at age 50 to pay for a grandchild's education after having owned the account for three years, then:
he entire withdrawal is subject to a 10 percent penalty tax
Jane works for a company that allows employee contributions under a 401(k) plan. When will Jane become fully vested in her plan contributions?
immediately
The need to control increasing health-care costs led to the development of:
managed care plans
What kind of misrepresentation on an insurance application gives the insurer reason to terminate a policy?
material fact
Comprehensive Coverage
means the policy covers a variety of conditions or medical services.
Which information is not to be included in the first part of an insurance application?
medical information
What factor must insurers consider when setting the premium for health insurance policies?
morbidity rate
From an insured's point of view, which definition of total disability is more advantageous?
own occupation
Which of the following provides enrollees with access to limited health-care services through an exclusive panel of providers?
prepaid limited health service organization (PLHSO)
If Jack takes on a less hazardous job, what may the insurer do?
reduce the premium
Which is a standard practice used by insurers to reduce the chance of adverse selection in a group life insurance policy?
require minimum participation levels by eligible group members
Life insurance policies are generally prohibited from including provisions that would do any of the following EXCEPT:
require the policyowner to notify the insurer if he or she assigns the policy to a third party
What practice do insurance underwriters use to evaluate the risk that a proposed insured presents?
risk selection
An entity purchase buy-sell agreement used with a close corporation is called a(n):
stock redemption agreement
Which of the following features of major medical policies protects the insured by limiting the out-of-pocket dollar amount the insured must pay?
stop-loss provision
Which of the following activities does not violate the insurance code?
telling clients that an agent holds a chartered financial consultant (ChFC) designation
What is the principal difference between medical savings accounts (MSAs) and health savings accounts (HSAs)?
the amount of the maximum deductible and the maximum annual out-of-pocket cost
In which of the following instances is a disability income insurance policy's 'other insurance with other insurers' provision likely to come into play?
the insured has coverage from a state's workers' compensation program
Which does a basic physician expense policy specify?
the maximum benefit per visit, and a maximum number of visits per injury or illness
After the deductible is paid, Medicare Part A pays full benefits for the first 60 days of hospitalization as well as for:
the rest of the benefit period from the 61st day to the 90th day
Transacting insurance includes all of the following EXCEPT:
underwriting insurance contracts
If a Health Savings Account (HSA) account holder takes money out of the fund but does not use it to cover medical costs, the withdrawal:
will be subject to ordinary income taxes and a possible 20 percent penalty tax
Sandra has a Section 125 cafeteria plan. To pay for her benefits, the employer will:
withhold part of her pre-tax salary
