Certification Exam | Chapters 7, 10, 13, 14 ,15

All of the following statements are true regarding the taxation of personal life insurance used for charity, EXCEPT: Select one: a. In order for tax deductions to be valid, the charity must retain full ownership rights of the policy. b. A charity may be made a beneficiary of a personal life insurance policy, in which case ownership need not be relinquished. c. When a charity is made a beneficiary of a personal life insurance policy, premiums are tax-deductible. d. When a charity is made a beneficiary of a personal life insurance policy, the policyowner retains the right to change the beneficiary.

A policy may be given to the charity, and the value of the policy is tax-deductible. If the individual chooses to make the premium payments for the charity, those are also tax-deductible. The charity must retain ownership and rights of the policy for the tax deductions to be valid. The individual may also make the charity a beneficiary of a policy without relinquishing ownership. Payments of premiums are not tax-deductible, and the proceeds will be deducted from the estate as a charitable contribution. In this case, the policyowner retains the right to change the beneficiary, if necessary. The correct answer is: When a charity is made a beneficiary of a personal life insurance policy, premiums are tax-deductible.

Recurrent disability is: Select one: a. When the insured has a total disability, returns to work, but can only perform some of the duties they could perform prior to the disability b. A condition in a disability income policy that permits the insured to be automatically eligible for total disability income benefits regardless of their ability to work c. The inability of an individual to perform one or more work duties in their own occupation, or they cannot work full-time d. A time period specified in the policy during which the recurrence of a disabling condition is considered an extension of a prior disability

A recurrent disability provision is a time period specified in the policy, during which the recurrence of a disabling condition is considered an extension of a prior disability. This provision prevents the insured from needing to fulfill another elimination period for a disability that has simply reappeared. The recurrent disability provision is usually a period of 90 days, but in some policies, is six months. The correct answer is: A time period specified in the policy during which the recurrence of a disabling condition is considered an extension of a prior disability

Most long-term care policies require the insured be unable to perform at least: Select one: a. 1 ADL b. 2 ADLs c. 4 ADLs d. 10 ADLs

Activities of daily living (ADLs) include bathing, dressing, eating, mobility, transferring, toileting, and continence. Most long-term care (LTC) policies specify that an insured must be unable to perform at least two ADLs, or be cognitively impaired. The correct answer is: 2 ADLs

Agents selling long-term care and Medicare supplement policies may not use the following practices, EXCEPT: Select one: a. Twisting b. Replacement c. Cold lead advertising d. High pressure tactics

Agents are not permitted to use high pressure tactics, cold lead advertising or twisting in the sale of LTC and Medigap policies. The correct answer is: Replacement

When soliciting insurance policies to seniors, insurance professionals must take care to: Select one: a. Provide a full explanation of policy benefits b. Fully explain any overlapping coverage c. Have the prospective insured sign a statement acknowledging that the required information and disclosures were provided d. All of the above

All of the statements are included in the expectations of an insurance professional _ when soliciting insurance policies to seniors. The correct answer is: All of the above

When a life insurance policy becomes a MEC, what are the tax consequences? Select one: a. Interest loses tax-deferred advantage. b. Premiums are no longer tax-deductible. c. Premiums do not accrue interest. d. Withdrawals and policy loans are taxed as ordinary income.

All withdrawals and surrenders from a MEC are taxable, but the interest accrued on the cash value is tax-deferred, and the death benefit is tax-free if received in a lump-sum. The correct answer is: Withdrawals and policy loans are taxed as ordinary income.

Which of the following statements about long-term care coverage is CORRECT? Select one: a. Medicare supplement policies provide a significant amount of long-term care coverage. b. Medicaid provides long-term care coverage for individuals, regardless of income levels. c. Medicare and Medicaid are designed to cover a significant portion of the costs of long-term custodial or nursing home care. d. Long-term care insurance provides a broad range of coverage for services rendered at home, at adult care centers, or in nursing homes.

Although Medicare and Medicare supplement policies protect the elderly against the costs of medical care, neither covers a significant portion of long-term custodial or nursing home care. Although Medicaid provides some long-term custodial care coverage, only individuals who are almost destitute are eligible to receive benefits. Long-term care insurance provides a broad range of coverage for services rendered at home, at adult care centers, and in nursing homes. The correct answer is: Long-term care insurance provides a broad range of coverage for services rendered at home, at adult care centers, or in nursing homes.

All the following exclusions are permitted in a long-term care insurance policy, EXCEPT: Select one: a. Self-inflicted injuries b. Drug addiction c. Alzheimer's disease d. Participation in a felony

Alzheimer's disease cannot be excluded from coverage. The correct answer is: Alzheimer's disease

All of the following statements are true regarding the impairment rider in disability income policies, EXCEPT: Select one: a. The impairment rider is used when the insured has existing medical conditions. b. The impairment rider excludes coverage for the particular existing medical condition. c. The impairment rider drops off when the pre-existing condition exclusion period ends. d. The impairment rider allows insureds to obtain coverage in cases where they would otherwise be denied because of their health conditions.

An impairment rider is added to disability income policies in which the insured has an existing medical condition. The impairment rider excludes coverage for that particular condition. This rider allows insureds to obtain coverage in cases where they would otherwise be denied because of their health conditions. The impairment rider is a permanent aspect of the policy. Unlike pre-existing condition exclusions, the impairment rider does not fall off the policy after a certain number of months or years. The correct answer is: The impairment rider drops off when the pre-existing condition exclusion period ends.

What is the required free look period for replacement long-term care policies? Select one: a. 10 days b. 20 days c. 30 days d. 60 days

Applicants purchasing a replacement long-term care policy must be provided a 30-day free look period. The correct answer is: 30 days

Generally, how are health insurance policies taxed? Select one: a. If premiums are tax-deductible, benefits are taxed as income. b. If premiums are tax-deductible, benefits are also tax-deductible. c. Premiums and benefits are not taxed. d. None of the above

As a general rule, if the premiums are tax-deductible, the benefits are taxed as income. The correct answer is: If premiums are tax-deductible, benefits are taxed as income.

A long-term care insurance policy must contain which of the following provisions? Select one: a. Coverage for drug and alcohol dependency b. Probationary period of no longer than 180 days c. Coverage for conditions that result from war d. Guaranteed renewability

As a result of the 1996 Health Insurance Portability and Accountability Act (HIPAA), all long-term care policies sold today must be guaranteed renewable. The insurer cannot cancel the policy and must renew coverage each year, as long as the insured pays the premiums. The correct answer is: Guaranteed renewability

What is the earliest month a covered worker may begin to receive Social Security disability benefits? Select one: a. In month 5 of their disability b. In month 6 of their disability c. In month 12 of their disability d. In month 18 of their disability

At the earliest, a disabled covered worker may be eligible to receive Social Security disability benefits upon the sixth month of disability. The correct answer is: In month 6 of their disability

Benefits for individual medical expense, LTC and Medigap policies are: Select one: a. Taxable. b. Not taxable. c. Only taxed if an individual's unreimbursed medical expenses exceed 10% of their adjusted gross income. d. Only taxed if an individual's unreimbursed medical expenses do not exceed 10% of their adjusted gross income.

Benefits for individual medical expense, LTC and Medigap policies are received tax-free. The correct answer is: Not taxable.

All of the following are true regarding the business overhead expense policy, EXCEPT: Select one: a. The business owner owns the policy and pays the premiums. b. Benefits are used to pay the business expenses, such as rent, utility bills, employee and the business owner's salaries. c. Elimination periods are typically 30 days or less. d. Benefit periods are 1 to 2 years.

Business overhead expense (BOE) policies were created to help small business owners pay overhead expenses and keep the business operating when the owner becomes disabled. The business owner owns the policy and pays the premiums, but the benefits are used to pay the business' expenses such as rent, utility bills, and employee salaries. The BOE policy does not pay the owner's salary. BOE policies have elimination periods of 30 days or less and benefit periods of one to two years. The correct answer is: Benefits are used to pay the business expenses, such as rent, utility bills, employee and the business owner's salaries.

After the 5-month waiting period, Social Security disability benefits are payable to the disabled covered worker in the amount of: Select one: a. 1/4 their PIA b. 1/2 their PIA c. 3/4 their PIA d. Their total PIA

Disability income benefits are paid to the covered worker in the amount of their total PIA after a five-month waiting period. The correct answer is: Their total PIA

How may disability income benefits be paid? Select one: a. Monthly installments b. Periodic benefit payments, at least monthly c. Lump-sum d. All of the above

Disability income benefits can be paid periodically, at least monthly, or in a lump-sum. The correct answer is: All of the above

Which of the following is not a use of disability income insurance? Select one: a. Pay mortgage bill b. Pay credit card bill c. Pay medical expenses d. Purchase groceries

Disability income insurance is not intended to pay medical expense bills. Instead, it is designed to provide a replacement income while the insured is disabled and cannot work. The correct answer is: Pay medical expenses

The amount of periodic disability income benefits is based on the insured's: Select one: a. Medical conditions b. Earned income c. Place of residence d. Dependents

Disability income policies replace income while an insured cannot work; therefore, benefits are based on a portion of the insured's earned income. The correct answer is: Earned income

The percentage of disability income benefits to the insured's income is: Select one: a. 30 to 40% b. 50% c. 60 to 70% d. 100%

Disability income policies usually pay 60% to 70% of the insured's income. The correct answer is: 60 to 70%

Which of the following is the permitted compensation arrangement for agents' first year commission on LTC and Medigap policies? Select one: a. 200% of the renewal commission for the second year b. 400% of the renewal commission for the third year c. 100% of the renewal commission for the second year d. 200% of the renewal commission for the third year

For the first year's commission, insurers may not pay agents more than 200% of the renewal commission in the second year. The correct answer is: 200% of the renewal commission for the second year

Who owns the contract in group disability income policies? Select one: a. The individual insured b. Each individual and their covered dependents c. The insurer d. The employer, association or organization sponsoring the group contract

In group disability income policies, the employer, association or organization sponsors and owns the group contract. The correct answer is: The employer, association or organization sponsoring the group contract

In order to obtain fully insured status, a covered worker must accrue one quarter of coverage each calendar year after the age of 21 for a total of 40 quarters and minimum of six quarters, upon the earliest of: Select one: a. The year prior to reaching age 62 b. The year of disability onset c. The year prior to death d. All of the above

In order to obtain fully insured status, a covered worker must accrue one quarter of coverage each calendar year after the age of 21 for a total of 40 quarters and minimum of six quarters, upon the earliest of: the year prior to reaching age 62; the year of disability onset; or the year prior to death. The correct answer is: All of the above

Susan receives income payments for a disability. Benefits are not based on Susan's ability to perform work duties. Which policy does Susan have? Select one: a. Any occupation b. Own occupation c. Residual disability d. Income replacement

Income replacement contract benefits are not dependent on the insured's inability to perform work duties. Instead, income replacement contracts replace a portion of the insured's lost income due to a covered accidental injury or sickness. The correct answer is: Income replacement

Which of the following is generally true regarding premiums for individually-purchased life insurance and annuities? Select one: a. They are tax-deductible. b. They are not tax-deductible. c. Only life insurance premiums are tax-deductible. d. Only annuity premiums are tax-deductible.

Individual life insurance and annuities are purchased with after-tax dollars. Premiums generally cannot be deducted from taxes. The correct answer is: They are not tax-deductible.

How long is the conversion period for group long-term care policies? Select one: a. 31 days b. 60 days c. 90 days d. 180 days

Individuals must apply for the individual long-term care coverage and pay the premium within 31 days of the group long-term care coverage termination date. The correct answer is: 31 days

Which type of life insurance policy allows an employer to deduct premium payments as an ordinary business expense for tax purposes? Select one: a. Key employee b. Split-dollar plan c. Group life insurance d. Business continuation agreement

Life insurance policy premium payments are not tax-deductible as a business expense if the company is using the policy for business purposes; however, the proceeds are tax-free. The exception to this is when a business purchases group insurance for the benefit of its employees. The correct answer is: Group life insurance

Long-term care insurance differs from Medigap in which of the following ways? Select one: a. Long-term care insurance must be guaranteed renewable. b. Long-term care insurance provides custodial care. c. Long-term care insurance may impose a 6-month pre-existing condition exclusion. d. Long-term care insurance must provide a 30-day free look period.

Long-term care covers custodial care. The correct answer is: Long-term care insurance provides custodial care.

All of the following are ways long-term care coverage may be offered, EXCEPT: Select one: a. AD&D rider b. Life insurance rider c. Individual plan d. Group plan

Long-term care policies can be issued in several forms. These include: individual policies, group policies, and as a rider on a life insurance policies. The correct answer is: AD&D rider

Which of the following is not a requirement for qualified long-term care plans? Select one: a. Policies must accrue cash value. b. Inflation protection must be provided. c. The individual must be unable to perform at least 2 ADLs. d. Coverage cannot reimburse insureds for medical expenses or services covered by Medicare.

Long-term care policies cannot accrue cash value. The correct answer is: Policies must accrue cash value.

Long-term care policies contain all of the following provisions, EXCEPT: Select one: a. 30-day free look period b. Restricted coverage to skilled care only c. Shopper's guide provided to applicants prior to completing the policy application d. Policy summary provided if a long-term care policy is purchased with a life insurance policy

Long-term care policies cannot restrict coverage to only skilled care. The correct answer is: Restricted coverage to skilled care only

How can a long-term care policy be written? Select one: a. Stand-alone policy only b. Rider only c. Both stand-alone policy and rider d. None of the above

Long-term care policies may be written as a rider attached to a life insurance policy, or a stand-alone policy. The correct answer is: Both stand-alone policy and rider

Diane is 75 years of age and needs some assistance with preparing meals and bathing. She is the wife of a multi-millionaire. Which of the following policies would you recommend to her? Select one: a. Medicaid b. Long-term care c. Medigap d. Medicare

Long-term care policies provide coverage for custodial care. Diane would not be a good candidate for nursing home assistance through Medicaid because she is wealthy. The correct answer is: Long-term care

Long-term disability income policies pay benefits for periods of: Select one: a. Less than two years b. From six months to one year c. For two years or more d. For seven years or more

Long-term disability income policies provide long benefit periods of two years or more. The correct answer is: For two years or more

In a long-term care policy, pre-existing conditions must be covered after: Select one: a. 6 months from the effective date of coverage b. 12 months from the effective date of coverage c. 18 months from the effective date of coverage d. 24 months from the effective date of coverage

Many long-term care (LTC) policies do not cover pre-existing conditions which were present six months prior to the policy's effective date. This is the most restrictive definition of pre-existing conditions an insurer can use. Six months after the effective date of coverage, all pre-existing conditions must be covered. The correct answer is: 6 months from the effective date of coverage

Which of the following is an optional benefit under long-term care policies? Select one: a. Guarantee of insurability b. Nonforfeiture options c. Inflation protection d. All of the above

Optional benefits under long-term care (LTC) plans include: guarantee of insurability, return of premium, hospice care, nonforfeiture options, and inflation protection. The correct answer is: All of the above

All of the following are true statements regarding partial disability, EXCEPT: Select one: a. Partial disability benefits are only paid for sickness. b. Income is reduced because the insured cannot work. c. The insured cannot perform all of their occupational duties. d. The insured cannot work full-time.

Partial disability benefits can be paid for accidental injury or sickness. The correct answer is: Partial disability benefits are only paid for sickness.

Which of the following is true regarding the taxation of universal life insurance policies? Select one: a. Premiums are tax-deductible. b. All cash value is taxed upon withdrawal. c. Only withdrawals of premium dollars from the cash value are taxable. d. Cash value grows tax-deferred, but may be subject to taxation upon withdrawal.

Partial surrenders from a universal life policy are not taxable up to the amount of premium that makes up the cash value. Once all premiums have been withdrawn, then all withdrawals consisting of the interest portion of the cash value are subject to taxation. The correct answer is: Cash value grows tax-deferred, but may be subject to taxation upon withdrawal.

Which of the following factors is not used to establish the cost (premiums) for disability income insurance? Select one: a. The insured's occupation b. The insured's earned income c. The policy's benefit period d. The insured's sexual orientation

Premiums for disability income insurance are based on five factors: insured's occupation; insured's earned income; policy's definition of disability; length of the benefit period; and length of the elimination period. The correct answer is: The insured's sexual orientation

Arturo buys an individual disability income policy. What are the tax consequences? Select one: a. Premiums are not taxed. b. Premiums and benefits are tax-free. c. Benefits are taxable. d. Premiums are paid with after-tax dollars.

Premiums for individual disability income policies are not tax-deductible, but benefits are received tax-free. The correct answer is: Premiums are paid with after-tax dollars.

All of the following statements about key person life insurance are true, EXCEPT: Select one: a. A business is the owner, premium payor, and beneficiary of the policy. b. The key employee must agree to the coverage. c. The coverage is intended to cover the cost of hiring and training a replacement employee. d. Premiums are tax-deductible as a business expense.

Premiums for key person life insurance are not tax-deductible. The correct answer is: Premiums are tax-deductible as a business expense.

Social Security quarters of coverage earned are based on ________ quarters worked, and ________ be earned consecutively. Select one: a. Consecutive; must b. Consecutive; can c. Cumulative; cannot d. Cumulative; do not need to

Quarters of coverage earned are based on cumulative quarters worked, and do not have to be earned consecutively. The correct answer is: Cumulative; do not need to

Residual disability is: Select one: a. When the insured has a total disability, returns to work, but can only perform some of the duties they could perform prior to the disability b. A condition in a disability income policy that permits the insured to be automatically eligible for total disability income benefits regardless of their ability to work c. The inability of an individual to perform one or more work duties in their own occupation, or they cannot work full-time d. A time period specified in the policy during which the recurrence of a disabling condition is considered an extension of a prior disability

Residual disability is when the insured has a total disability, returns to work but can only perform some of the duties they could perform prior to the disability. The correct answer is: When the insured has a total disability, returns to work, but can only perform some of the duties they could perform prior to the disability

Which of the following statements about the respite care provision under a long-term care policy is CORRECT? Select one: a. It pays a benefit for a family caregiver to get away from their duties for a short period of time. b. It pays a benefit for the insured to return home for short visits. c. It pays a benefit for the insured to take a break at an approved day spa or adult day care. d. It pays a benefit to reimburse other family members who provide care for the insured.

Respite care pays the cost of either bringing a substitute provider into the insured's home or moving the insured to a care facility for a period of time. Its purpose is to give an unpaid caregiver (e.g., a spouse or family member) relief from their daily duties. The correct answer is: It pays a benefit for a family caregiver to get away from their duties for a short period of time.

Kenny is self employed. He owns a book bindery. Which statement accurately describes his Social Security tax obligation? Select one: a. Kenny must pay the employer and employee's tax portions. b. Kenny will only pay the employee's tax portion. c. Kenny will only pay the employer's tax portion. d. Kenny will not pay any Social Security tax because he is self-employed.

Self-employed individuals must pay the entire Social Security tax (employer and employee portions). The correct answer is: Kenny must pay the employer and employee's tax portions.

All of the following are false regarding disability income policy benefit periods, EXCEPT: Select one: a. Shorter benefit periods offer higher policy benefits. b. Premiums are not affected by the length of the benefit period. c. Longer benefit periods have higher premiums. d. Shorter benefit periods have higher premiums.

Shorter benefit periods have lower premiums, and longer benefit periods have higher premiums. The correct answer is: Longer benefit periods have higher premiums.

How are Social Security benefits determined? Select one: a. How long a covered worker has worked throughout their life b. How many dependents a covered worker has c. What type of retirement plan a person has d. How many years a person has been covered by Medicaid

Social Security benefits are based on how long a covered worker has worked throughout their life. The correct answer is: How long a covered worker has worked throughout their life

A covered worker must be ______ insured to receive Social Security retirement benefits. Select one: a. Currently b. Fully c. Disability d. Disability and currently

Social Security retirement benefits are only available to covered workers who are fully insured upon retirement. The correct answer is: Fully

Which of the following provisions must be included in a long-term insurance policy? Select one: a. Probationary period of no longer than 180 days b. Guaranteed renewability c. Surgical fees d. Coverage for drug dependency

The Health Insurance Portability and Accountability Act (HIPAA) mandated that all long-term care policies must be guaranteed renewable. The insurer cannot cancel the policy and must renew coverage each year so long as the insured pays the premiums. The correct answer is: Guaranteed renewability

A disability policy containing which of the following provisions is the cheapest? Select one: a. Any occupation policy that has a 180-day elimination period b. Own occupation policy that has a 90-day elimination period c. Any occupation policy that has a 90-day elimination period d. Own occupation policy that has a 180-day elimination period

The any occupation definition is more restrictive and consequently, less expensive than the own occupation definition of disability. Policies with longer elimination periods are less expensive. The correct answer is: Any occupation policy that has a 180-day elimination period

The ________ provision refunds 60 to 80% of the insured's premiums and interest in cases where premium payments far exceed claims paid. Select one: a. Return of premium b. Cash surrender value c. Impairment rider d. Cost of living adjustment rider

The cash value surrender rider refunds 60 to 80% of the insured's premiums and interest in cases where premium payments far exceed claims paid. This benefit is only paid when the disability income policy is terminated. The correct answer is: Cash surrender value

Erin bought a $100,000 whole life insurance policy. When she is 65 she decides to surrender the policy for its cash value of $60,000. Of the cash value, $50,000 is premiums. How much of Erin's cash surrender is taxable? Select one: a. $10,000 b. $50,000 c. $60,000 d. $100,000

The difference between the cash value and the premiums paid is taxable upon policy surrender ($60,000 - $50,000 = $10,000). The correct answer is: $10,000

Which of the following is false regarding eligibility for Social Security disability benefits? Select one: a. The covered worker must be unable to do the work they did prior to the disability. b. The covered worker must not be able to do other work. c. The disability must have lasted or will last for at least 6 full months or be expected to end in death. d. All of the above

The disability must be total and the following must be met: the covered worker cannot do the work they did prior to the disability; the covered worker cannot do other work because of physical or mental conditions; and the disability has already lasted or will last for at least 12 full months, or the disability is expected to result in death. The correct answer is: The disability must have lasted or will last for at least 6 full months or be expected to end in death.

How does an elimination period work in disability income policies? Select one: a. Once the policy is issued, the insured must undergo an elimination period, usually 30 to 90 days, before coverage begins. b. For each disability, the insured must satisfy an elimination period. c. The insured must satisfy the elimination period for the first disability claimed under the policy. d. The insured must satisfy the elimination period for disabilities caused only by sickness.

The elimination period is a time deductible, starting on the date of disability for a certain number of days, until benefits are paid. The elimination period must be satisfied for each disability. The correct answer is: For each disability, the insured must satisfy an elimination period.

All of the following are reasons the face amount of a life insurance policy may be subject to tax, EXCEPT: Select one: a. The policy's ownership has been transferred to a third party. b. The designated beneficiary is the deceased's estate. c. The deceased transferred ownership of the policy within three years prior to death. d. The policy proceeds are paid out in a lump-sum.

The face amount of a life insurance policy may be included in the taxable estate of the deceased and subject to federal estate tax in one or more of following situations: 1.) the deceased was the owner of the policy or an incident of ownership occurred at the time of death. An incident of ownership is one or more rights of owning a policy, including the rights to surrender the policy for cash value, change the beneficiaries, borrow or take loans against the policy, or assign or transfer the policy; 2.) the deceased's estate is the policy's designated beneficiary; and 3.) the deceased gifted, assigned or transferred ownership of the policy within three years prior to the date of death. The correct answer is: The policy proceeds are paid out in a lump-sum.

Which of the following employees would not be covered by Social Security? Select one: a. A person hired by the Federal government in 1980 b. A priest c. A self-employed, homeless street musician d. All of the above

The following people are not covered by Social Security: federal employees hired before 1984; police officers who have a retirement program; employees covered by the Railroad Retirement Act; religious workers who have declared a life of poverty; and self-employed individuals with low incomes. The correct answer is: All of the above

What is the full Social Security retirement age for a person born after 1960? Select one: a. 62 b. 65 c. 67 d. 70

The full retirement age is 65 for covered workers who were born in 1937 or earlier. The full retirement age increases for individuals born between the years of 1938 to 1959 with the maximum retirement age set at age 67 for covered workers who were born in 1960 or later. The correct answer is: 67

What is the purpose of the guaranteed insurability rider in a disability income policy? Select one: a. The insured may receive a refund of premiums paid if the policy's benefits were not utilized by age 65. b. The insured may increase disability income benefits without increasing the premium. c. The insured may purchase additional coverage at certain points in time, or at certain ages. d. The insured's policy is guaranteed renewable until age 65.

The guaranteed insurability rider (GIR) allows the insured to buy additional disability income coverage without proving evidence of insurability. The insured is usually eligible to purchase additional coverages at certain ages specified in the policy, or upon life events, such as marriage or the birth of a child. The correct answer is: The insured may purchase additional coverage at certain points in time, or at certain ages.

All of the following are true regarding the lifetime benefits provision in disability income policies, EXCEPT: Select one: a. The lifetime benefits provision prolongs the disability income policy benefit period beyond the age 65 cutoff to the insured's entire life. b. The provision usually requires that the insured is totally disabled prior to age 65. c. The disability must be caused by accidental injury. d. Policies that pay lifetime benefits for sickness usually require that the disability occur prior to the insured reaching the age of 55.

The lifetime benefits provision prolongs the disability income policy benefit period beyond the age 65 cutoff to the insured's entire life. The provision usually requires that the insured is totally disabled prior to age 65. Some policies specify that the disability must be caused from accidental injury, while other policies include both accidental injury and sickness. Policies that pay lifetime benefits for sickness usually require that the disability occur prior to the insured reaching the age of 55. The correct answer is: The disability must be caused by accidental injury.

An insurance producer suggests to a client, Jim, that he purchase a second Medicare supplement policy in order to provide coverage for all his medical costs. Which of the following best describes this offer? Select one: a. Advisable, since growing medical costs quickly deplete the means of people on fixed incomes b. Advisable since current medical expenses can never be covered by Medicare and one supplement alone c. A matter of judgment, since the client currently has several levels of coverage for health care costs d. Illegal, since the sale of a supplement that provides the client with more than one Medicare supplement is prohibited by law

The offer or sale of a second Medicare supplement to an insured is expressly forbidden by state and federal laws. The correct answer is: Illegal, since the sale of a supplement that provides the client with more than one Medicare supplement is prohibited by law

Social Security is also referred to as: Select one: a. Medicare b. Medicaid c. OASDI d. Disability income insurance

The old name for Social Security is OASDI, or Old Age, Survivors, and Disability Insurance. The correct answer is: OASDI

Which of the following definitions of total disability is most beneficial to the insured? Select one: a. Any occupation b. Own occupation c. Accidental means d. Not enough information provided

The own occupation definition is more favorable because benefits are paid if the insured cannot perform the duties of their own occupation, not any occupation. The correct answer is: Own occupation

Which definition of total disability is most restrictive? Select one: a. Own occupation b. Any occupation c. All occupations d. They are equivalent.

The own occupation definition of disability is more lenient than the "any occupation" definition, and is reserved for individuals with specialized training, such as surgeons. The correct answer is: Any occupation

All of the following would be paid under a presumptive disability benefit, EXCEPT: Select one: a. Loss of vision in both eyes b. Total speech loss c. Partial hearing loss d. Loss of use of both hands

The presumptive disability benefit will pay total disability benefits for the following: loss of vision in both eyes; dismemberment or loss of use in any two limbs; or complete loss of hearing or speech. The correct answer is: Partial hearing loss

What is the basis for Social Security retirement benefits? Select one: a. Status of dependency b. Age c. Primary insurance amount (PIA) d. Quarters of credit

The primary insurance amount (PIA) is an individual's average monthly wage earnings and is used to determine the amount of Social Security retirement benefits. The correct answer is: Primary insurance amount (PIA)

Which disability income rider restricts the insured's disability income benefit to an amount based on earned income during the past two years? Select one: a. Cost of living adjustment rider b. Relation of earnings to insurance rider c. Guaranteed insurability rider d. Lifetime benefits

The relation of earning to insurance provision restricts the insured's disability income benefit to an amount based on earned income during the past two years. The correct answer is: Relation of earnings to insurance rider

Which of the following best describes the seven-pay test? Select one: a. Premiums paid over a seven-year period cannot exceed the total level annual premiums for a paid-up policy in seven years. b. Policy cash value cannot exceed cost basis. c. First seven premium payments cannot exceed cost basis over a ten-year period. d. First seven annuity premium payments cannot exceed cost basis over a ten-year period.

The seven-pay test assures that life insurance policies meet the legal definition of life insurance and do not become MECs. The correct answer is: Premiums paid over a seven-year period cannot exceed the total level annual premiums for a paid-up policy in seven years.

Of the following policy features, which waives the premium while the insured receives disability income benefits? Select one: a. Social insurance supplement b. Hospital confinement rider c. Waiver of premium d. Return of premium rider

The waiver of premium feature waives policy premiums while the insured is disabled and receiving disability income benefits. The correct answer is: Waiver of premium

Which of the following correctly describes Social Security survivors benefits for a covered worker who is fully insured? Select one: a. Monthly payments to the widow equal to the deceased spouse's PIA if the widow is age 65 or above b. Lump-sum death benefit paid to the widow and eligible children of the deceased covered worker c. Monthly payments to a dependent parent age 62 and above d. All of the above

These are all Social Security survivors benefits. The correct answer is: All of the above

Which of the following statements best describes how cash value in a life insurance policy is taxed? Select one: a. Cash value grows tax-free. b. Cash value does not earn interest and is, therefore, not taxable. c. If the policy cash value is surrendered, the interest earned on the cash value is taxable as ordinary income. d. None of the above

In whole life insurance policies, premiums build cash value. The cash value increases as interest is earned on the premiums, which grows tax-deferred. The policyowner can borrow against the policy cash value. If the policy cash value is surrendered or endows, the interest is taxable as ordinary income. The correct answer is: If the policy cash value is surrendered, the interest earned on the cash value is taxable as ordinary income.

Susan has a $500,000 permanent life insurance policy. She has paid $200,000 in premiums, and the policy has a cash value of $216,000. If Susan dies, her beneficiary will pay taxes on: Select one: a. $0 b. $16,000 c. $284,000 d. $500,000

Life insurance death benefits are tax-free. The cash value is included in the death benefit, so it is not taxed. The correct answer is: $0

Who pays tax on personal life insurance given as a gift? Select one: a. The insurer b. The state c. The gift-giver d. The gift recipient

Life insurance given as a gift may be subject to a federal gift tax, which is paid by the giver of the gift. The correct answer is: The gift-giver

Of the following provisions, which protects against inflation? Select one: a. FIO rider b. COLA rider c. Relation of earnings to insurance d. FIO and COLA riders

The cost of living rider (COLA) allows the insured's disability income benefits to increase to offset the effect of inflation. The correct answer is: COLA rider

Which is not used to determine the premium an insured must pay for their disability income policy? Select one: a. Life insurance policies b. Earned income c. Length of elimination period d. Occupation

The insured's life insurance policies are not considered in determining disability income policy premiums. The correct answer is: Life insurance policies

An elimination period for long-term care policies that is counted based on the number of days the insured receives care is called: Select one: a. Service day basis. b. Calendar day basis. c. Long-term care basis. d. Medicare basis.

Elimination periods are counted on a service day basis (days receiving care) or calendar day basis (days are counted once an individual is eligible for LTC benefits). The correct answer is: Service day basis.

Which of the following is not a benefit trigger under long-term care policies? Select one: a. ADLs b. Financial need c. Cognitive impairment d. Medical necessity

Financial need is not a benefit trigger for long-term care policy benefits. The correct answer is: Financial need

James is buying disability income insurance. This insurance will _________________. Select one: a. Pay death benefits b. Pay medical providers c. Pay medical expenses d. Replace his income

The purpose of disability income insurance is to replace an insured's lost income when they cannot work. The correct answer is: Replace his income

What is the purpose of the elimination period in disability income policies? Select one: a. To prevent adverse selection b. To prevent overinsurance c. To prevent payment of short-term disabilities d. To prevent payment of long-term disabilities

The purpose of the elimination period is to prevent the insurer from paying short-term disabilities. The correct answer is: To prevent payment of short-term disabilities

Which policy feature waives the premium while the insured is receiving disability income benefits? Select one: a. Waiver of premium b. Hospital confinement rider c. Return of premium rider d. Social insurance supplement

The waiver of premium feature waives policy premiums while the insured is disabled. The correct answer is: Waiver of premium

How long is the reduction in Social Security retirement benefits effective for a person who retires early? Select one: a. 2 years b. 5 years c. Until age 70 d. All throughout retirement

This reduction remains all through retirement. The correct answer is: All throughout retirement

ABC employer pays the entire cost of the group health insurance premiums. Which of the following is true regarding the taxation of premiums and benefits? Select one: a. Premiums are tax-deductible to the employer and benefits are taxable to the employees. b. Premiums are not tax-deductible to the employer and benefits are tax-free to the employees. c. Premiums are tax-deductible to the employer and benefits are not taxable to the employees. d. Premiums are paid with after-tax dollars and benefits are taxable as ordinary income.

When the employer pays the premiums for a group health insurance policy, the employer can tax-deduct the amount of premiums paid. Employees do not pay taxes on medical expense benefits received. The correct answer is: Premiums are tax-deductible to the employer and benefits are not taxable to the employees.

While at work, a heavy box falls on Emily's foot breaking three of her toes. She is unable to work for one month. Two months later while working, she breaks her toes again. Which of the following definitions of disability applies to Emily's situation? Select one: a. Presumptive disability b. Partial disability c. Residual disability d. Recurrent disability

A recurrent disability is a disabling injury that occurs as the result of a prior disabling injury. The correct answer is: Recurrent disability

Which of the following policies is used to transfer ownership of a business upon the disability of an owner? Select one: a. Disability reducing term insurance b. Business overhead expense insurance c. Key person insurance d. Disability buy-sell policy

A disability buy-sell policy is used to establish how ownership in a business is transferred upon an owner's disability. The correct answer is: Disability buy-sell policy

Which of the following is false regarding business overhead expense? Select one: a. It keeps the business running when the owner becomes disabled. b. The owner's salary is paid. c. The employees' salaries are paid. d. Overhead expenses include rent and utilities.

The owner's salary is not paid under a business overhead expense policy. The correct answer is: The owner's salary is paid.

The purpose of disability income insurance is to: Select one: a. Replace the insured's income b. Pay medical expenses c. Pay medical providers d. Pay death benefits

The purpose of disability income insurance is to replace the insured's lost income when they cannot work. The correct answer is: Replace the insured's income

Maria is moving boxes into her new apartment and strains her back, causing a disability. Her disability income policy will not pay benefits because her injury was not unforeseen. Maria's policy uses: Select one: a. The accidental means definition of injury b. The accidental bodily injury definition of injury c. The own occupation definition of disability d. The any occupation definition of disability

With the accidental means definition of injury, the accident must be unforeseen and the reason the accident occurred must be unexpected. The insurer considered Maria's accident to be an expected occurrence and, therefore, declined benefits. The correct answer is: The accidental means definition of injury

Which of the following benefits is not provided under Social Security? Select one: a. Workers' Compensation b. Disability c. Survivor d. Retirement

Workers' Compensation benefits are not provided by Social Security. The correct answer is: Workers' Compensation

What unfair trade practice manipulates through the prospect of something desirable? Select one: a. Twisting b. Churning c. Coercion d. Intimidation

Coercion generally manipulates through the prospect of something desirable. The correct answer is: Coercion

Any expression of a grievance against an insurer made in any form to the Delaware Department of Insurance is called a: Select one: a. Bill b. Hearing c. Complaint d. Regulation

"Complaint" will mean any expression of a grievance against an insurer made in any form to the Delaware Department of Insurance. An allegation of insurance fraud will not be considered a complaint for the purposes of this regulation. The correct answer is: Complaint

Which of the following statements is true regarding key person disability income insurance? Select one: a. Premiums are not tax-deductible, but benefits are received tax-free. b. Premiums are tax-deductible, but benefits are taxable. c. Premiums are tax-deductible and benefits are tax-free. d. Premiums are not tax-deductible and benefits are taxable.

A business cannot deduct the premiums for key person disability income insurance, but the benefits are received tax-free. The correct answer is: Premiums are not tax-deductible, but benefits are received tax-free.

A group life insurance policy may be issued to an association having at its outset a minimum of: Select one: a. 50 persons b. 100 persons c. 400 persons d. 800 persons

A group life insurance policy may be issued to an association or to a trust or to the trustee(s) of a fund established, created or maintained for the benefit of members of one or more associations. The association or associations will have at the outset a minimum of 100 persons. The correct answer is: 100 persons

A life insurance policy is incontestable after it has been in force for a period of: Select one: a. 6 months b. 1 year c. 2 years d. 3 years

A life insurance policy will be incontestable after it has been in force during the lifetime of the insured for a period of not more than 2 years after its date of issue, except for nonpayment of premiums. The correct answer is: 2 years

What is the maximum interest rate that can be charged for late payments on a life policy? Select one: a. 5% b. 6% c. 7% d. 10%

A life policy insurer may impose a maximum interest charge of 6% annual for the number of days of grace elapsing before the payment of the premium. Grace will date from the premium due date specified in the policy. The correct answer is: 6%

What is the general rule for taxation of personal life insurance? Select one: a. Premiums are paid with after-tax dollars; proceeds received in a lump-sum are received tax-free; proceeds received in installments are taxable only to the extent of interest earned. b. Premiums are paid with pre-tax dollars; proceeds received in a lump-sum are taxed; proceeds received in installments are not taxed. c. Premiums are paid with after-tax dollars; proceeds are taxed. d. Premiums are paid with pre-tax dollars; proceeds are taxable only if received in a lump-sum.

As a general rule, premiums for life insurance policies are not tax-deductible and proceeds from life insurance policies are tax-free if received in a lump-sum. If proceeds are received in installments, a portion of the proceeds will contain interest, which is taxable. The correct answer is: Premiums are paid with after-tax dollars; proceeds received in a lump-sum are received tax-free; proceeds received in installments are taxable only to the extent of interest earned.

When a producer unlawfully mixes a client's funds with their own funds, this is known as: Select one: a. Twisting b. Churning c. Commingling d. Misrepresentation

Commingling of funds is prohibited. The producer may not use funds unlawfully for their own use. The correct answer is: Commingling

What level of long-term care is provided to assist an individual with ADLs? Select one: a. Skilled care b. Intermediate care c. Custodial care d. Respite care

Custodial care is provided to assist an individual with ADLs. The correct answer is: Custodial care

The entity in Delaware that protects consumers from insolvent insurers is the: Select one: a. Delaware Consumer Health Services b. Delaware Proactive Policy Payment Program c. Delaware Life and Health Insurance Guaranty Association d. Insurance Trust Fund of Delaware

Delaware Life and Health Insurance Guaranty Association protects insureds against policies sold by insolvent insurers. The correct answer is: Delaware Life and Health Insurance Guaranty Association

How are personal life insurance dividends taxed? Select one: a. Interest earned on dividends is considered taxable income. b. Dividends are considered a return of overcharged premium. c. Dividends are not taxable because premiums are paid with after-tax dollars. d. All of the above

Dividends are considered a return of overcharged premium, and are not taxable because premiums are paid with after-tax dollars. Interest earned on dividends is taxable income. The correct answer is: All of the above

Mark moved his agency office across town and updated the name, but neglected to notify the Insurance Commissioner. Which of the following is a potential result of his neglect to give notification? Select one: a. He could be arrested. b. He could be fined up to $10,000 c. He could forfeit commissions on sales made prior to the notification. d. He could incur a penalty such as license revocation.

Failure to notify the Insurance Commissioner of an address and/or name change could result in a penalty such as license revocation. He would not be arrested, nor would he be fined $10,000 or lose commissions. The correct answer is: He could incur a penalty such as license revocation.

What penalty may be imposed for a company or person guilty of violating the Unfair Trade Practices Act? Select one: a. Fines only b. Loss of license only c. Jail time only d. Fines and loss of license

Fines and loss of license may be imposed for a company or person guilty of violating the Unfair Trade Practices Act. The correct answer is: Fines and loss of license

If coverage becomes terminated under a group, how much notice is the employer required to give the employee prior to the conversion expiration? Select one: a. 10 days b. 15 days c. 21 days d. 30 days

If any individual insured under a group life insurance policy in which coverage becomes terminated, and such individual is not given notice of the existence of the conversion right at least 15 days prior to the expiration date of such period. The correct answer is: 15 days

Which of the following is not an optional benefit provided by LTC policies? Select one: a. Guaranteed insurability b. Nonforfeiture options c. Inflation protection d. Guaranteed renewable or noncancelable

LTC policies must be guaranteed renewable or noncancelable. The correct answer is: Guaranteed renewable or noncancelable

Long-term care policies must be at least: Select one: a. Cancelable b. Conditionally renewable c. Guaranteed renewable d. Optionally renewable

Long-term care policies are either guaranteed renewable or noncancelable. The correct answer is: Guaranteed renewable

Joe becomes totally disabled. How much will Social Security pay Joe's wife, who relies on child support payments from Joe, to care for their 12-year twins? Select one: a. 1/4 Joe's PIA b. 1/2 Joe's PIA c. 3/4 Joe's PIA d. Joe's PIA

Monthly payments to a disabled worker's spouse, if the spouse is caring for a child under the age of 16, or a disabled child under the age of 22 are made in the amount of 1/2 of the worker's PIA. The correct answer is: 1/2 Joe's PIA

Benefits under a disability income policy are provided until the insured reaches the age of: Select one: a. 59 1/2 b. 61 c. 62 d. 65

Most long-term disability income policies provide benefits until the insured reaches the age of 65. The correct answer is: 65

Which of the following life insurance policy plans is NOT prohibited? Select one: a. A plan which pays profits only to members of a designated group b. A "registered" policy c. A policy plan that pays dividends d. A policy providing for the segregation of policyholders into mathematical groups

No life insurer may issue or deliver certain prohibited policy plans. These plans include any policy containing or referring to one or more of the following provisions or statements: any agreement or plan, which provides for the accumulation of profits and for payment of such profits only to members or policyholders of a designated group or class; any policy (other than one "registered" as a security under applicable state or federal law) purporting to be "registered" or otherwise specially recorded; or any policy providing for the segregation of policyholders into mathematical groups. The correct answer is: A policy plan that pays dividends

Lifetime benefits for total disability caused by sickness must begin prior to the insured reaching the age of: Select one: a. 40 b. 55 c. 60 d. 65

Policies that pay lifetime benefits for disability caused from sickness usually require that the disability occur prior to the insured reaching the age of 55. The correct answer is: 55

A policy loan on a whole life policy is: Select one: a. Not taxable b. Taxable c. Tax-deferred d. Taxable if not repaid prior to policy maturation

Policy loans are not taxable. The correct answer is: Not taxable

Which of the following is NOT a replacement transaction? Select one: a. Life insurance reissued with a reduction in cash value b. Life insurance converted to reduced paid-up insurance c. Life insurance premiums raised on a renewal d. Life insurance is amended to effect a reduction in benefits

Replacement means buying new life insurance or a new annuity, which is meant to replace or modify existing life insurance. The correct answer is: Life insurance premiums raised on a renewal

Social Security disability benefits are payable to a covered disabled worker until the age of: Select one: a. 50 b. 60 c. 62 d. 65

Social Security disability benefits are only available prior to the age of 65. The correct answer is: 65

Which of the following agencies or organizations does not have an exemption under the Privacy Act? Select one: a. Congress b. Bureau of Census c. Driver's license bureau d. The general accounting office

The driver's license bureau does not routinely have access to all information on an individual because it is not an exempt agency. The correct answer is: Driver's license bureau

Typically, how long is the elimination period in short-term disability income policies? Select one: a. 10 days b. No more than 30 days c. No more than 90 days d. 180 days LH144006 Feedback Your answer is correct

The elimination period is typically no more than 30 days in short-term disability income policies. The correct answer is: No more than 30 days

What is the grace period for premiums for group life insurance policies? Select one: a. 14 days b. 21 days c. 30 days d. 31 days

There is a grace period of 31 days for group life insurance policies. The correct answer is: 31 days

An ordinary life insurance policy can be surrendered for its cash surrender value after it has been paid for at least: Select one: a. 2 years b. 3 years c. 4 years d. 5 years

Upon surrender of a life insurance policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least 3 full years in the case of ordinary insurance or 5 full years in the case of industrial insurance, the insurer will pay, instead of any paid-up nonforfeiture benefit, a cash surrender value. The correct answer is: 3 years

Roberto's Sewing Machine Company has a group disability income policy for its employees. Premiums are entirely paid by the company. Which of the following is true regarding the benefits? Select one: a. Taxable b. Not taxable c. Only taxed if an individual's unreimbursed medical expenses exceed 10% of their adjusted gross income d. Only taxed if an individual's unreimbursed medical expenses do not exceed 10% of their adjusted gross income

When an employer pays all premiums for a group disability income policy, benefits are fully taxable to employees. The correct answer is: Taxable

Luka is eligible to receive both spousal and retirement benefits. Which of the following is true? Select one: a. Luka will receive the spousal benefit only. b. Luka will receive the retirement benefit only. c. Luka will receive both the spousal and the retirement benefits. d. Luka will receive the larger of the two benefits.

When an individual is dually eligible for Social Security benefits, they will only receive the larger of the two benefits. The correct answer is: Luka will receive the larger of the two benefits.

What nonfinancial examination is conducted by the Delaware Insurance Department of an insurer's methods and business practices including those of an insurer's agents? Select one: a. Fiduciary examination b. Suitability examination c. Market conduct examination d. Code of conduct examination

A market conduct examination is a nonfinancial examination conducted by the Delaware Insurance Department of an insurer's methods and business practices including those of an insurer's agents. The correct answer is: Market conduct examination

A person unlicensed for a specific line of authority is authorized to do which of the following regarding insurance in Delaware? Select one: a. Sell insurance independently b. Negotiate insurance c. Solicit insurance d. None of the above

A person will not sell, solicit or negotiate insurance in Delaware for any class or classes of insurance unless the person is licensed for that line of authority. The correct answer is: None of the above

An insurance producer license will remain in effect: Select one: a. Unless revoked or suspended b. As long as the correct fee is paid c. If continuing education requirements are met by the due date d. All of the above

An insurance producer license will remain in effect unless revoked or suspended, as long as the fee is paid and continuing education requirements for resident individual producers are met by the due date. The correct answer is: All of the above

The "policy loan" provision of a life insurance policy states that after how many full years' premiums have been paid, the insurer can advance a loan? Select one: a. 2 years b. 3 years c. 4 years d. 5 years

After 3 full years' premiums have been paid, and after the policy has a cash surrender value and while no premium is in default beyond the grace period for payment, the insurer will advance an amount equal to or less than the loan value of the policy. The correct answer is: 3 years

Persons have a right to conversion to an individual life insurance policy if they have been insured under a group policy for at least: Select one: a. 2 years b. 3 years c. 4 years d. 5 years

All persons insured under a group life insurance policy for at least 5 years prior to termination will be entitled to have issued to them an individual policy of life insurance. The correct answer is: 5 years

If a life insurance policy does not allow for a refund, when must an insurer provide a buyer's guide and policy summary to prospective buyers? Select one: a. Prior to accepting the first premium or premium deposit b. 3 days after accepting the first premium or premium deposit c. 5 days after accepting the first premium or premium deposit d. On delivery with the policy

An insurer must provide to all prospective purchasers, a Buyer's Guide and a Policy Summary prior to accepting the applicant's initial premium or premium deposit, unless the policy for which application is made contains an unconditional refund provision of at least 10 days. The correct answer is: Prior to accepting the first premium or premium deposit

Who must be notified within 30 days about a termination of a business relationship with an insurance producer either with or without cause? Select one: a. An authorized representative b. The insurance company c. The Insurance Commissioner d. The insurer

An insurer or authorized representative of the insurer that terminates an insurance business relationship with a producer must notify the Insurance Commissioner within 30 days following the effective date of the termination. The correct answer is: The Insurance Commissioner

An insurance producer license will remain in effect unless which of the following occur? Select one: a. It's revoked or suspended by the Commissioner b. The producer has not paid the required fees c. Continuing education requirements are not met by the due date d. Any of the above

Any of the above will result the insurance producers' inability to conduct the business of insurance due to licensing issues. The correct answer is: Any of the above

If an insurer gives a customer reasonable belief that an agent has the power and authority to bind the principal even in cases where the agent does not have such authority, this would be: Select one: a. Express authority b. Apparent authority c. Implied authority d. Lingering implied authority

Apparent authority is a situation in which the insurer gives the customer reasonable belief that an agent has the power and authority to bind the principal even in cases where the agent does not have such authority. The correct answer is: Apparent authority

For a violation of which the violator has knowledge, the Commissioner may require payment of a monetary penalty not more than: Select one: a. $1,000 b. $5,000 c. $10,000 d. $20,000

But if the person knew or should have known that they were in violation of the insurance laws, then the penalty cannot be more than $10,000 per violation, to a total not exceeding $150,000 in any 6-month period. The correct answer is: $10,000

Which of the following would NOT be considered unfair discrimination? Select one: a. Discrimination abased on race b. Discrimination abased on marital status c. Discrimination abased on occupation d. Discrimination abased on blindness

Discrimination is a necessary part of insurance, including occupation, hobbies, and expectation of life. It is an unfair trade practice to discriminate against individuals of the same class and equal expectation of life in the rates, terms, conditions, benefits, or any policy provision for insurance. It is illegal to discriminate based on sex, race, marital status, national origin, or blindness. The correct answer is: Discrimination abased on occupation

What is the minimum grace period for annuity premiums? Select one: a. 14 days b. 21 days c. 28 days d. 30 days

For annuities, there will be a period of grace of 1 month, but not less than 30 days, within which any stipulated payment to the insurer falling due after the first may be made. The correct answer is: 30 days

If the Commissioner determines that someone's actions are in violation of insurance laws, what is the Commissioner's first action? Select one: a. Issue a cease and desist order b. Issue an arrest warrant c. Issue an incarceration order d. Revoke the offender's license

If after the hearing the Commissioner determines that the actions are in violation of the insurance laws, then the Commissioner must put his findings in writing and issue to the person an order to cease and desist from that act. The correct answer is: Issue a cease and desist order

If the age of a person on their annuity policy has been misstated, the amount payable on the contract will be: Select one: a. The amount on the contract if the contract was accepted b. The amount on the contract minus a penalty c. The amount that would have been due had the correct age been given d. Determined by a court

If the age or sex of the person or persons upon whose life or lives the contract is made, or of any of them has been misstated, the amount payable or benefits accruing under the contract will be adjusted to such as the stipulated payment or payments to the insurer would have purchased according to the correct age or sex. The correct answer is: The amount that would have been due had the correct age been given

Who initiates independent inquiries and conducts investigations when it is believed that an act of insurance fraud has been committed in Delaware? Select one: a. FBI b. Governor c. Commissioner d. Fraud Prevention Bureau

It will be the duty of the Fraud Prevention Bureau to initiate independent inquiries and conduct independent investigations when the Bureau has cause to believe that an act of insurance fraud has been, or is currently being committed. The correct answer is: Fraud Prevention Bureau

What is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person? Select one: a. Life Insurance b. Health Insurance c. Personal Injury Insurance d. Accident Insurance

Life insurance is insurance on human lives which pays a benefit upon the death of the insured. The correct answer is: Life Insurance

What is the term used for policies and procedures pertaining to selling and advertising? Select one: a. Authority b. Suitability c. Market conduct d. Moral standards

Market conduct is the term used to define policies pertaining to the selling and advertising of insurance. The correct answer is: Market conduct

What is described by "No person will make, publish, disseminate or circulate, directly or indirectly, any oral or written statement or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, and which is circulated to injure any person engaged or proposing to engage in the business of insurance?" Select one: a. Rebating b. Defamation c. Unfair discrimination d. Coercion and intimidation

No person will make, publish, disseminate or circulate, directly or indirectly, or aid, abet or encourage such activity of any oral or written statement or any pamphlet, circular, article or literature which is false, or maliciously critical of or derogatory to the financial condition of an insurer, or of an organization proposing to become an insurer, and which is circulated to injure any person engaged or proposing to engage in the business of insurance. The correct answer is: Defamation

Individual Medicare supplement and LTC premiums are: Select one: a. Always tax-deductible b. Only tax-deductible if an individual's unreimbursed medical expenses exceed 10% of their adjusted gross income c. Only taxable if an individual's unreimbursed medical expenses exceed 10% of their adjusted gross income d. Never tax-deductible

Premiums for Medigap and LTC policies may be deducted from taxable income if the individual's unreimbursed medical expenses exceed 10% of their adjusted gross income. The correct answer is: Only tax-deductible if an individual's unreimbursed medical expenses exceed 10% of their adjusted gross income

Alex has an individual disability income policy. Of the following statements, which is correct? Select one: a. Alex's premiums are tax-deductible, but benefits are subject to taxation. b. Premiums cannot be deducted from taxes, but benefits are tax-free. c. Premiums are not tax-deductible and benefits are subject to taxation. d. Premiums can be deducted from taxes and benefits are received tax-free.

Premiums for individual disability income insurance are paid with after-tax dollars, but benefits are not considered taxable income. The correct answer is: Premiums cannot be deducted from taxes, but benefits are tax-free.

Determining what is appropriate for a client is known as the client's: Select one: a. Insurability b. Suitability c. Physicality d. Integrity

Producers should recommend insurance products that are suitable to the needs of their clients. The correct answer is: Suitability

What illegal action occurs if a buyer of an insurance policy is given anything of significant value as an inducement to purchase or renew a policy? Select one: a. Rebating b. Twisting c. Churning d. Coercion

Rebating occurs if a buyer of an insurance policy is given anything of significant value as an inducement to purchase or renew a policy. The correct answer is: Rebating

All of the following acts are considered unfair trade practices, EXCEPT: Select one: a. Misrepresentation b. Replacement c. Rebating d. Coercion

Replacement is not, in itself, an illegal practice. It occurs when a new life insurance policy is written to take the place of an existing policy. It can rise to the level of twisting if a producer or insurer induces an insured through misrepresentation to lapse or surrender a policy in order to buy a similar policy from the selling producer or insurer. The correct answer is: Replacement

When can the Insurance Commissioner examine the records of an insurer? Select one: a. Anytime b. Only with 48 hours notice c. Only with a court order d. Only when a complaint is filed

The Insurance Commissioner or an examiner may conduct an examination of any company as often as the Commissioner deems appropriate. The correct answer is: Anytime

The statements made for a group life insurance policy are considered: Select one: a. Facts b. Assumptions c. Warranties d. Representations

Statements made by the policyholder or persons insured for a group life insurance policy are considered statements and not warranties The correct answer is: Representations

An insurance agent can use which of the following terms to describe theirself? Select one: a. Financial planner b. Financial consultant c. Investment advisor d. Insurance producer

Terms such as financial planner, investment advisor, financial consultant, or financial counseling shall not be used in such a way as to imply that the insurance agent is generally engaged in an advisory business in which compensation is unrelated to sales unless such is actually the case. The correct answer is: Insurance producer

What happens if the Commissioner believes a person or insurer is in violation of the Privacy Act? Select one: a. The Commissioner may order a hearing and issue a cease and desist order b. The Commissioner may issue a maximum fine of $10,000 for each occurrence in which a person or insurer continues to violate the Privacy Act after a cease and desist order has been issued. c. Both of the above d. None of the above

The Commissioner may order a hearing, issue a cease and desist order and if found to be in violation issue a fine of up to $10,000 for each occurrence after the cease and desist order. Repetitive violations that indicate a general business practice are punishable by a fine of up to $50,000 per violation. Any person who obtains personal or private information without good reason is subject to one year in jail and a maximum fine of $10,000. The correct answer is: Both of the above

The Commissioner may suspend, revoke or refuse to issue or renew a producer license for which of the following reasons? Select one: a. Failure to pay alimony b. Failure to pay child support c. Failure to traffic fines d. Failure to pay property taxes

The Commissioner, after giving notice and an opportunity to be heard, may terminate, place on probation, suspend, or revoke the license of an insurance producer if the producer for failing to pay taxes or child support The correct answer is: Failure to pay child support

What is the maximum amount that the Delaware Life and Health Insurance Guaranty Association will pay to a person for a life insurance death benefit from an insolvent insurer? Select one: a. $100,000 b. $200,000 c. $300,000 d. $500,000

The Delaware Life and Health Insurance Guaranty Association will pay a maximum of $300,000 per insured life for a life insurance death benefit. The correct answer is: $300,000

The Privacy Act of 1974 was enacted to establish a code of fair information practices dictating how personally identifiable information of individuals is handled by what agencies? Select one: a. City b. County c. State d. Federal

The Privacy Act of 1974 was enacted to establish a code of fair information practices dictating how personally identifiable information of individuals is handled by federal agencies, and prevent invasions of privacy. The correct answer is: Federal

The cost of examining any insurer, any person with the authority to control an insurer, or a promoter is to be paid by: Select one: a. The Commissioner b. The State of Delaware c. The Attorney General d. The person being examined

The cost of examining any insurer, any person with the authority to control an insurer, or a promoter is to be paid by the person being examined. The correct answer is: The person being examined

The maximum amount of a debt that can be insured by credit insurance is the: Select one: a. Net debt b. Gross debt c. Mature debt d. Inherent debt

The initial amount of credit life insurance will not exceed the total amount repayable under the credit transaction, which is the gross debt. The correct answer is: Gross debt

Advertisements for insurance must set forth all the following, EXCEPT: Select one: a. The initial premium charge b. The minimum premium charge c. The period of premium guarantee d. The frequency of premium redetermination

The initial premium charge and its period of guarantee, the maximum premium charge, the fact that the maximum premium charge might be charged, and the frequency of premium redetermination dates must be set forth prominently in every advertisement. The correct answer is: The minimum premium charge

The insurance producer license examination tests all the following the knowledge, EXCEPT: Select one: a. General insurance knowledge b. The duties and responsibilities of an insurance producer c. Insurance ethics d. The insurance laws and regulations of the United States

The insurance producer license examination tests the knowledge of the individual concerning the lines of authority for which application is made, the duties and responsibilities of an insurance producer, general insurance knowledge, insurance ethics, and the insurance laws and regulations of Delaware. The correct answer is: The insurance laws and regulations of the United States

The licensee must maintain at their principal place of business all required records for inspection by the Commissioner for a period of: Select one: a. 1 year b. 2 years c. 3 years d. 4 years

The licensee must maintain at their principal place of business the license issued by the Commissioner and all required records. Records will be retained and available for inspection by the Commissioner for a period of 3 years. The correct answer is: 3 years

Disclosure authorization forms include all of the following information, EXCEPT: Select one: a. List of people permitted to disclose personal/private info b. The type of information they can disclose c. Date and valid time period for each form d. Department and length of service of each person on the form

The list of people, the type of information they can disclose and the date and length of time that the forms are valid are all required. The length of service and department are not required information on the form. The correct answer is: Department and length of service of each person on the form

All of the following are unfair claim settlement practices, EXCEPT: Select one: a. The misrepresentation of pertinent facts or insurance policy provisions relating to coverages at issue b. The failure to adopt reasonable standards for investigation of claims c. Making a deal with the insured to settle a claim for less than a reasonable amount d. Working with the department of insurance to provide explanations for nonsettlement of claims

The misrepresentation of pertinent facts, failure to adopt reasonable standards for claim investigation and trying to settle claims for less than is due the insured are all regarded as unfair claims settlement practices. Working with the department of insurance to provide explanations for non settlement of claims is not a typical unfair claims practice. The correct answer is: Working with the department of insurance to provide explanations for nonsettlement of claims

The premium for an employee life insurance policy must be paid from either the employer's funds or: Select one: a. The insurer's funds b. Funds contributed by the insured employees c. State funds d. Federal funds

The premium for a group life policy must be paid either from the employer's funds or from funds contributed by the insured employees, or from both. The correct answer is: Funds contributed by the insured employees

The premium for the group life insurance for dependents must be paid from funds contributed by: Select one: a. The employer only b. The covered person only c. The employer or the covered person d. The state of Delaware

The premium for the group life insurance for dependents must be paid either from funds contributed by the employer, union, association or other person to whom the policy has been issued, or from funds contributed by the covered person, or from both. The correct answer is: The employer or the covered person

Which of the following is not a disclosure requirement or form that a producer is responsible for? Select one: a. The producer must disclose to an applicant the insurance products they intend to sell. b. The producer must disclose all sources of information gathered when underwriting the policy. c. The producer must disclose their referral sources to the applicant. d. The producer should disclose any observed deterioration in the applicant's health between application and delivery of the policy.

The producer is not required to disclose referral sources to the applicant. All of the other items are required. The correct answer is: The producer must disclose their referral sources to the applicant.

The purpose of the Delaware Consumer Credit Insurance Model Act is to promote the public welfare by: Select one: a. Discouraging reasonable competition b. Promoting the corporate welfare c. Regulating consumer credit insurance d. Selling credit life and health insurance

The purpose of the Delaware Consumer Credit Insurance Model Act is to promote the public welfare by regulating consumer credit insurance, but not to prohibit or discourage reasonable competition. The correct answer is: Regulating consumer credit insurance

What is the term used to describe the different types of insurance, including (but not limited to) life, accident, health, property and title insurance? Select one: a. Bundle Insurance b. Insurance Lines c. Lines of Authority d. Categories of Authority

The term "line of authority" refers to the type of insurance in which licensure is sought. Lines of authority include: life, accident and health/sickness, property, casualty, variable life and annuity, personal lines, fidelity and surety, marine and transportation, and title insurance. The correct answer is: Lines of Authority

The term of any consumer credit insurance ends when: Select one: a. The debt is paid off b. 3 days past the debt being paid off c. 5 days past the debt being paid off d. 7 days past the debt being paid off

The term of any consumer credit insurance will not extend beyond the termination date specified in the policy. The correct answer is: The debt is paid off

All of the following terms can be used interchangeably with the term "insurance producer", EXCEPT: Select one: a. Insurance agent b. Insurance broker c. Insurance consultant d. Insurance administrator

The terms "insurance agent," "insurance broker," and "insurance consultant" can be used interchangeably with the term "insurance producer." The correct answer is: Insurance administrator

What is the minimum grace period for non-industrial life insurance premiums? Select one: a. 14 days b. 21 days c. 28 days d. 30 days

There is a grace period of 30 days or, at the option of the insurer, of 1 month of not less than 30 days. The correct answer is: 30 days

A lapsed non-industrial life insurance policy can be reinstated at any time within: Select one: a. 1 year b. 2 years c. 3 years d. 4 years

Unless a life insurance policy has been surrendered for its cash surrender value, its cash surrender value has been exhausted, or the paid-up term insurance, if any, has expired; the policy will be reinstated at any time within 3 years (or 2 years in the case of industrial life insurance policies). The correct answer is: 3 years

Wild Bill's Bowling Alley provides a group disability income policy to its employees. Employees pay a portion of the premiums. Which of the following is true? Select one: a. Premiums are completely tax-deductible for Wild Bill and all employees. b. The portion of premiums paid by Wild Bill is not tax-deductible. c. Benefits are taxable to employees based on the portion of premiums paid by Wild Bill. d. Benefits are never taxable.

When the cost of premiums is shared between the employer and employees, benefits are taxable based on the portion of premiums paid by the employer. The correct answer is: Benefits are taxable to employees based on the portion of premiums paid by Wild Bill.

Stan's Job Placement Services provides a group disability income policy to all employees. Premiums are paid in part by the employees. Of the following statements, which is true? Select one: a. Benefits are not taxable. b. Benefits are taxable to employees based on the portion of the premiums paid by Stan. c. Premiums are 100% tax-deductible. d. None of the above

When the cost of premiums is shared between the employer and employees, benefits are taxable based on the portion of the premiums paid by the employer. The correct answer is: Benefits are taxable to employees based on the portion of the premiums paid by Stan.

Where replacement insurance is involved, when must the "Notice Regarding Replacement" be given to the applicant? Select one: a. Before starting the sales presentation b. At the time of taking the application c. Within 3 days of taking the application d. Within 5 days of taking the application

Where replacement is involved, the agent or broker must present to the applicant, not later than at the time of taking the application, a "Notice Regarding Replacement." The correct answer is: At the time of taking the application