Comprehensive Final 4

A client purchases an individual disability income policy and receives the policy from the insurer 45 days after application. Upon receipt of the policy, the client typically has ______days to review and return the policy to receive a full refund for any reason. A 10 B 20 C 35 D 45

10

Failure to enroll in Medicare Part B, when required, may result in a lifetime cumulative premium penalty of _____% for each 12 month period a beneficiary was not enrolled in Part B. A 5 B 15 C 20 D 10

10

If funds are prematurely withdrawn from a Modified Endowment Contract (MEC) they are subject to a _____% penalty on any gains. A 20 B 15 C 6 D 10

10 For withdrawals of any gains from a MEC prior to age 59 1/2 there is a 10% tax penalty that applies.

An insured should receive necessary claim forms within _____ days after notice of claim. A 10 B 15 C 20 D 5

15

Notice of claim is required within _____ days of loss. A 10 B 20 C 15 D 90

20

A Medicare Supplement Policy must include, as a core benefit, Medicare Part B coinsurance in the amount of _______. A 20% B 25% C 15% D 10%

20%

Any licensed agent who has committed any offense denounced by the Code may have an insurance license suspended by the Commissioner for up to: A 18 months B 3 years C 2 years D 1 year

3 years

Carla finances the purchase of a new car. The cost is $30,000. How much credit life insurance can be issued to cover this loan? A $50,000 B $60,000 C $30,000 D $40,000

30,000

Payment of the first premium and an application must be submitted to an insurer for individual coverage within how many days to convert group coverage to an individual policy not requiring proof of insurability? A 31 days B 45 days C 7 days D 10 days

31 days

A Small Employer is defined as any person, firm, corporation, partnership, or association that is actively engaged in business and has ______ employees or less. A 2 B 20 C 50 D 100

50

Distributions from a Modified Endowment Contract (MEC) made on or after age _____ are not subject to any tax penalties. A 70 1/2 B 65 C 59 1/2 D 62

59 1/2

In a Medicare Supplement replacement sale, if the original policy has been in force for less than ______ months, the replacing insurer shall waive any time periods applicable to preexisting conditions to the extent that they have already been satisfied under the original policy. A 12 B 9 C 3 D 6

6

An individual purchased a fixed annuity with flexible premiums. When she annuitized the policy, she chose the Life Income 10-Year Certain option. What would the beneficiary receive if the annuitant dies 4 years after the annuity payout began? A The undistributed balance B Nothing C 10 more years of payments D 6 more years of payments

6 more years of payments In any life annuitization option, distributions are made for as long as the annuitant lives. The period certain defines the minimum number of payments that will be made if the annuitant does not live as long as the guarantee period. Since the annuitant died 4 years following annuitization, 6 years of payments remain.

If a policyowner of a life insurance policy accidently pays in premiums in excess of the MEC guidelines, the insurer can refund the excess within ______ days of the end of the contract year. A 60 B 30 C 45 D 10

60

If an insurer makes a payment for a claim but the insured is dissatisfied with it, he/she must wait _____ days after proof of loss before he/she might take any legal action. A 45 B 60 C 90 D 20

60

Medicare Part A enrollment is mandatory for all citizens and legal residents at age: A 62 B 65 C 59 1/2 D 60

65

Proof of loss is required within _____ days of loss. A 180 B 90 C 60 D 45

90

A producer must include their name and address on which of the following? A Any policy amendment or rider B An insurance policy's cover page C A policy summary D A buyer's guide

A policy summary

All are true regarding funding of Social Security, except: A The employer withholds the employee's tax and remits it with the employer's portion B Self-employed individuals pay both the employer and employee amounts C Actuarial value of contributions is related to actuarial value of benefits D The funds are kept in a trust fund and invested in government securities

Actuarial value of contributions is related to actuarial value of benefits The actuarial value of contributions is not related to the actuarial value of benefits.

The beneficiary of a life insurance policy on his recently deceased spouse selects the Life Income Only Settlement Option in order to get the highest monthly payment for life. Which of the following would NOT affect the monthly amount he will receive? A The amount of the death benefit B Age of insured spouse at time of death C The gender of the beneficiary D The age of the beneficiary at the spouse's death

Age of insured spouse at time of death The income payment is based on the beneficiary's age and gender at the time of the insured's death. The amount payable is stated in a table in the policy and expressed as a rate per $1,000 of death benefit.

Confidential information shared by the producer to the insurer and does not become part of the policy is the __________. A Consumer Investigative Report B Attending Physician Statement C Medical Examination D Agent's Report

Agent's Report An agent's report is a personal statement submitted by the producer to the insurer about information the agent would like to share with the insurer on a confidential basis that they may have learned during the application process while at the applicant's home or place of business.

Concerning COBRA, which of the following is correct? A Provides 36 months of continuation of coverage for disabled participants B Applies to employers with 20 or more employees C Provides employees and dependents 36 months of continuation of coverage after termination of employment D Provides 18 months of continuation of coverage for dependents of Medicare-eligible employees

Applies to employers with 20 or more employees

When must an insurer provide a Medicare Supplement Buyer's Guide and an Outline of Coverage? A At the time of delivery B At the time of application C At the time of issuance D At the time of initial solicitation

At the time of application

In a long-term care policy transaction, when must the outline of coverage be provided to the applicant? A At the time of issuance B At the time of delivery C At the time of initial solicitation and prior to the application D At the time of premium collection

At the time of initial solicitation and prior to the application

In an insurance contract the value that each party gives the other is said to be the: A Subject matter B Offer C Consideration D Acceptance

Consideration

The insurer's underwriter may find information about an applicant's moral character, hobbies, work and general reputation from a: A Consumer Investigative Report B Medical Examination C Agent's Report D Attending Physician Statement

Consumer Investigative Report Inspection report is the same thing

In a policy summary all of the following must be shown on both a guaranteed and non-guaranteed basis, except: A Dividends B Premiums C Cash values D Interest rates

Dividends Dividends are never guaranteed.

A(n) _________ plan calls for the business to purchase life insurance policies on each of the business owners. A Entity B Group C Cross Purchase D Credit Protection

Entity An entity plan calls for the business to buy life insurance policies on the business owners. A cross purchase plan calls for the partners to buy life insurance policies on one another.

Generally, corporations can use annuities to fund all of the following, except: A Estate creation B Employee pensions C Structured settlements D Nonqualified deferred compensation plans

Estate creation Corporations may use annuities to provide pensions for employees, funding nonqualified deferred compensation plans or qualified retirement plans, and even to structure payments from liability settlements, known as structured settlements.

The exclusion ratio states that once the entire cost basis has been recovered from a non-qualified annuity income benefit payout then any further payments are __________. A Fully taxable since the excess payments must represent only earnings B Taxed at the favorable annuity continuation income rates C Still tax favored for annuitants over the age of 70 D Taxed as capital gain but only 50% of the gain is applied

Fully taxable since the excess payments must represent only earnings

Information about an applicant's work behavior or character gathered from neighbors or co-workers would be included on an? A Agent's Report B Inspection Report C MIB D APS

Inspection Report

Which of the following scenarios will trigger an income tax due? A Taking out a policy loan in an amount greater than the total premiums paid in B Receiving a participating policy's cash dividend C Interest earned on dividends left on deposit with the insurer D Cancelling the policy during the free look period

Interest earned on dividends left on deposit with the insurer While the dividend is free from income tax the interest earned on the dividend is subject to tax.

Which of the following beneficiary designations prevents a policyowner from assigning the policy, taking a policy loan, or surrendering the policy without the beneficiaries consent? A Named B Class C Irrevocable D Incontestable

Irrevocable

Which of the following is not a function of insurance? A It is the substitution of a small certain expense for a large uncertain loss B It is designed to be used to protect the insured from dishonest acts C It protects against uncertainty and reduces anxiety D It transfers risk from the insured to the insurer

It is designed to be used to protect the insured from dishonest acts

How does an Option A death benefit feature of a Universal Life policy work? A It pays out the policy's face amount plus the cash values B It pays out the face amount less the cash values C It pays out the policy's cash values D It pays out the policy's face amount

It pays out the policy's face amount Option A in a Universal Life Insurance policy pays out a level death benefit, while Option B pays out an increasing death benefit, the face amount plus the cash values.

Which of the following death benefits is paid out to the beneficiary income tax free? A An annuity whose annuitant dies during the accumulation phase B Life insurance when the insured dies while the policy is in force C An annuity whose annuitant dies during the distribution phase D An annuity whose annuitant dies when used for retirement income planning

Life insurance when the insured dies while the policy is in force Only life insurance pays out an income tax free death benefit. While an annuity does allow for a beneficiary to be named, any tax deferred earnings are subject to income tax when paid out.

If the premium payable for the first few years of the policy (e.g. 3-5) are lower than an ordinary whole life policy in order to make it more affordable, what premium paying method was used? A Reduced B Adjustable C Modified D Graded

Modified

Lucy uses her dividends to purchase single premium additional permanent benefits at her attained age. Which Dividend Option is Lucy exercising? A Paid-up Option B One-Year Term C Paid-up Additions D Reduced Paid-Up

Paid-up Additions Only Paid-up Additions, Paid-up Option and One-Year Term are dividend options. Reduced Paid-Up is a nonforfeiture option. Lucy wanted additional permanent benefits so she should choose Paid-up Additions.

All of the following are correct regarding Key Employee Life Insurance, except: A Premiums are deducted from the employee's salary B The employer has an insurable interest in the key employee C The employer is the owner/applicant of the policy D The beneficiary (the employer) typically receives the death benefit free of federal income tax

Premiums are deducted from the employee's salary Key Employee Life Insurance is designed to indemnify a company against the loss of a key employee. The employer has an insurable interest in the key employee, and is the owner, premium payor and beneficiary. The premiums are not tax deductible, and the death benefit is federal income tax free.

Penelope received benefits from her disability policy and went back to work. After 30 days she found she was not able to work and began to immediately receive her disability payments. Which of following provisions made this possible? A Recurrent Disability Provision B Presumptive Disability Provision C Second Injury Provision D Residual Disability Provision

Recurrent Disability Provision

Which insurer's owner receives taxable corporate dividends as a return of profit? A Stock B Mutual C Fraternal D Reciprocal

Stock

If an annuitant withdraws funds from their annuity prior to age 59 1/2 what is the tax consequence? A Tax on the entire withdrawal plus a 10% tax penalty B Tax on the tax deferred portion of the withdrawal along with a 15% tax penalty C Tax and 10% penalty tax on the withdrawal that represents earnings D Tax on cost basis and 10% tax penalty on the tax deferred portion of the withdrawal

Tax and 10% penalty tax on the withdrawal that represents earnings

In order for the next variable annuity income benefit payment to increase from the previous one received which of the following must occur? A The actual performance of the separate account must be the same as the policy's assumed interest rate B The actual performance of the separate account must be greater than the policy's assumed interest rate C The actual performance of the separate account must be less than the policy's assumed interest rate D More premium dollars must be deposited into the policy

The actual performance of the separate account must be greater than the policy's assumed interest rate

All of the following are true of a substandard risk, except: A The insured may have a flat additional premium added to their base premium B The premium would be discounted C The coverage could be reduced for a period of time D The insured may be rated as older than their actual age

The premium would be discounted

Which of the following statements is correct regarding a Waiver of Premium Rider on a participating whole life policy? A Cash values do not grow B Dividends cease when the rider activates C The premiums are waived until either the insured recovers from the disability, the policy achieves paid-up status, or the insured dies D The death benefit is reduced by the amount of all premiums waived

The premiums are waived until either the insured recovers from the disability, the policy achieves paid-up status, or the insured dies

If an annuity policyowner stops putting money into their periodic or flexible premium annuity what happens to the policy values? A They are forfeited to the insurer for breach of contract B They are protected by the nonforfeiture provision C They automatically purchase an immediate payout option D They are refunded to the policyowner in a lump sum

They are protected by the nonforfeiture provision Just like with life insurance any policy values contained in the contract are nonforfeitable for nonpayment of premium. They can be used for surrender or buying a paid up annuity.

All of the following are examples of an absolute assignment, except: A A court orders the existing policyowner to change it to their ex-spouse B Using a Life Insurance policy as collateral for a loan C A business permits the change of ownership of a company owned policy over to a retiring executive D A grandparent signs over ownership of a juvenile policy to their grandchild who is now reached age of majority

Using a Life Insurance policy as collateral for a loan

A __________ is a contractual agreement that allows a company or person to buy one or more of the rights of ownership in a life policy on the life of another person, should the owner/insured become terminally ill. A Emergency Fund Rider B Viatical Settlement C Leveraged Insurance Agreement D Living Needs Rider

Viatical Settlement