Exam questions
What is the difference between the Medicare approved amount for a service or supply and the actual charge? a) Excess charge b) Actual charge c) Limiting charge d) Coinsurance
A
What is the shortest possible elimination period for group short-term disability benefits provided by an employer? a) 0 days b) 30 days c) 60 days d) 90 days
A If an employer provides short-term disability benefits for its employees, the elimination period can be nonexistent, and the benefits can last as long as two years. The benefit typically spans 70-80% of the insured's income.
What is the advantage of reinstating a policy instead of applying for a new one? a) Proof of insurability is not required b) The face amount can be increased c) The cash values have gained interest while the policy was lapsed d) The original age is used for premium determination
D The reinstatement provision allows the policyowner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. If the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status.
Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT a) An agent misrepresents policy benefits to convince a policyowner to replace policies. b) An agent offers the use of his lake house to person as an inducement to buy. c) An agent offers to share his commission with a policyholder. d) An agent offers tickets to a baseball game as an inducement to buy insurance.
A
What is the penalty for IRA distributions that are below the required min of the year? A 10% B 25% C 50% D 100%
C 50% of the shortfall from the required annual amount
Which of the following would be exempt from the policy replacement regulations for insurers? a) Credit life insurance b) All annuities c) Group life policies through direct solicitation d) Term life products
A
Which of the following produces evaluations of insurers' financial status often used by state departments of insurance? a) AM Best b) NAIC c) Consumer's guide d) SEC
A AM Best & Company assigns ratings to life, property and casualty insurance companies based upon the financial stability of the insurer.
The market value adjustment in modified guaranteed annuities refers to which of the following? a) The difference between the contracted interest rate and the rate at surrender b) The penalty for a premature surrender of the annuity c) The performance of the annuity investments d) The percentage the insurer keeps for its services
A The market value adjustment in a modified guaranteed annuity is usually a percentage of the difference between the contracted rate of interest in the annuity and the current rate at surrender.
The term "illustration" in a life insurance policy refers to a) A presentation of non-guaranteed elements of a policy. b) A depiction of policy benefits and guarantees. c) Pictures accompanying a policy. d) Charts and graphs.
A The term "illustration" means a presentation or depiction that includes non-guaranteed elements of a policy of individual or group life insurance over a period of years. Illustrations must also include name of the insurer and the agent, information about the proposed insured and the policy itself.
Which of the following is NOT among the goals of a Medicare supplement application? a) Advising applicants regarding the availability of counseling services b) Presuming the applicant is eligible for Medicaid, based on the nature of the policy c) Determining whether or not an applicant has an existing Medicare supplement policy d) Determining whether or not the policy will replace another accident and health policy
B Medicare supplement policies must ask the applicant if they are eligible for Medicaid.
Under the Affordable Care Act, which classification applies to health plans based on the amount of covered costs? a) Risk classification b) Metal level classification c) Guaranteed and nonguaranteed d) Grandfathered and nongrandfathered
B Plans other than self-insured plans will be classified into four levels determined by how much of one's expected health care costs are covered. The four plans are bronze, silver, gold, and platinum. This is called metal level classification.
How many hours of Ethics must a producer complete as part of continuing education every 2 years? a) 2 b) 3 c) 4 d) 5
B Producers must complete at least 3 hours of Ethics CE every license renewal period.
s it pertains to group health insurance, COBRA stipulates that a) Terminated employees must be allowed to convert their group coverage to individual policies. b) Group coverage must be extended for terminated employees up to a certain period of time at the employer's expense. c) Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense. d) Retiring employees must be allowed to convert their group coverage to individual policies.
C COBRA requires employers with 20 or more employees to continue group medical insurance for terminated workers and dependents for a specified period of time. The employee can be required to pay up to 102% of the coverage's premium.
Which of the following provisions must be included on the first page of a Medicare supplement policy and states the insurer's right to change premium amounts? a) Insurer's Rights b) Coverage Limitations c) Continuation Provision d) Premium Provision
C The Continuation Provision, also known as a Renewal Provision, must be included on the first page of Medicare supplement policies. This provision explains the right of the insurer to alter premium amounts.
Shortly after a replacement transaction on a Medicare supplement policy, the insured decided to cancel the policy but is unsure whether the free-look provision applies. The insured could find that information in the a) Buyer's Guide. b) Certificate of Coverage. c) Notice Regarding Replacement. d) Policy application.
C The Notice Regarding Replacement must inform the applicant of the 30-day free-look provision of the replacing policy.
What is the elimination period for Social Security disability benefits? a) 12 months b) 3 months c) 5 months d) 6 months
C The elimination period for Social Security disability benefits is 5 months.
Which of the following provisions must be included on the first page of a Medicare supplement policy and states the insurer's right to change premium amounts? a) Premium Provision b) Insurer's Rights c) Coverage Limitations d) Continuation Provision
D The Continuation Provision, also known as a Renewal Provision, must be included on the first page of Medicare supplement policies. This provision explains the right of the insurer to alter premium amounts.
All of the following qualify for Medicare Part A EXCEPT a) Anyone who is willing to pay a premium. b) Anyone that qualifies through Social Security. c) Anyone who is at the end stage of renal disease. d) Anyone who is over 65, not covered by Social Security, and is willing to pay premium.
A For Medicare Part A, a person must be age 65 or otherwise qualify.
In a replacement situation, all of the following must be considered EXCEPT a) Assets. b) Benefits. c) Limitations. d) Exclusions.
A In a replacement situation the agent must be careful to compare the benefits, limitations and exclusions found in the current and the proposed replacement policy.
In a life settlement contract, whom does the life settlement broker represent? a) The owner b) The insurer c) The beneficiary d) The life settlement intermediary
A Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.
Which of the following is true regarding the insurance amount in a credit life policy? a) The amount of coverage can be greater than the amount owed. b) Creditor can only insure the debtor for the amount owed. c) Creditor may insure the debtor for an unlimited amount of coverage. d) Allowable amount of coverage is determined by the State Insurance Commissioner.
B Credit life insurance cannot pay out more than the balance of the debt, so that there is no financial incentive for the death of the insured.
The authority granted to an agent through the agent's contract is referred to as a) Absolute authority. b) Express authority. c) Apparent authority. d) Implied authority.
B Express powers are written into the contract between the insurer and the agent.
Following hospitalization because of an accident, Bill was confined in a skilled nursing facility. Medicare will pay full benefits in this facility for how many days? a) 80 b) 3 c) 20 d) 100
C Following hospitalization for at least three days, if medically necessary, Medicare pays for all covered services during the first 20 days in a skilled nursing facility. Days 21 through 100 require a daily copayment.
What happens if a deferred annuity is surrendered before the annuitization period? a) The insurer can only apply the surrender value toward another annuity. b) Deferred annuities cannot be surrendered prior to the annuitization period. c) The owner will receive the surrender value of the annuity. d) The owner will only receive a refund of premium.
C If a deferred annuity is surrendered prior to annuitization, the surrender value of the annuity is guaranteed according to the nonforfeiture provision.
A medical insurance plan in which the health care provider is paid a regular fixed amount for providing care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called a) Reimbursement plan. b) Fee-for-service plan. c) Prepaid plan. d) Indemnity plan.
C Under a prepaid plan, the health care providers are paid for services in advance, whether or not any services are provided. The amount paid to the provider is based upon the projected annual cost as determined by the provider.
At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized? a) 55 b) 59 1/2 c) 62 d) 65
D After age 65, a withdrawal from an HSA used for a nonhealth purposes will be without a penalty, although taxed.
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? a) Universal life b) Adjustable life c) Term life d) Limited pay
A Universal Life policies allow for policyholders to withdraw a limited portion of the policy's cash value. Each withdrawal, however, is usually charged, and the amount and frequency of withdrawals are usually limited.
Annually renewable term policies provide a level death benefit for a premium that a) Fluctuates. b) Increases annually. c) Decreases annually. d) Remains level.
B Annually renewable term policies provide a level death benefit for a premium that increases each year with the age of the insured.
Chris, who is unlicensed, works part-time in her father's insurance agency. She may perform all of the following activities EXCEPT a) Call prospects and collect expiration data of their existing policies for her father. b) Collect premium for in-force policies and explain coverages to clients that have existing policies written by her father. c) Make appointments with clients and prospective clients to meet with her father. d) Assist her father in completing applications for insurance.
B In order to collect premiums and explain coverages, Chris would need to be licensed.
Which of the following is licensed solely to advise insureds about their policies? a) Broker b) Actuary c) Consultant d) Agent
C Insurance consultants offer advice and counseling regarding any contract of insurance issued in Oregon.
Employer health plans must provide primary coverage for individuals with end-stage renal disease before Medicare becomes primary for how many months? a) 12 months b) 24 months c) 30 months d) 36 months
C The Omnibus Budget Reconciliation Act of 1990 as amended by the Balanced Budget Act of 1997 requires the employer health plan to provide primary coverage for 30 months for individuals with end-stage renal (kidney) disease before Medicare becomes primary.
Which of the following is true regarding a term health policy? a) It is conditionally renewable. b) It is guaranteed renewable. c) It is noncancellable. d) It is nonrenewable.
D In term health policies, the owner has no rights of renewal.
What is the waiting period on a Waiver of Premium rider in life insurance policies? a) 30 days b) 3 months c) 5 months d) 6 months
D Most insurers impose a 6-month waiting period from the time of disability until the first premium is waived.
How often must a producer renew his or her insurance license? a) Every 3 years b) Every 10 years c) Annually d) Every 2 years
D Producers must complete continuing education in order to renew their licenses. The license renewal date occurs every 2 years on the last day of the month that the license was originally issued.
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? a) Assumed b) Express c) Implied d) Apparent
C Implied authority is not written in the agent's contract but is required in order for the agent to conduct business. Implied authority exists because not every single detail of an agent's authority can be written in a contract.
Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this? a) A stunt person pays a low premium and receives a superior classification of disability. b) An attorney pays a higher premium and receives a poorer classification of disability. c) A secretary pays a higher premium and receives a superior classification of disability. d) A construction worker pays a higher premium and receives a poorer classification of disability.
D In disability income policies, the insured's occupation is a critical underwriting factor. The more hazardous the applicant's occupation, the higher the premium the insurance company will charge.
How are contributions to a tax-sheltered annuity treated with regards to taxation? a) They are taxed as income for the employee. b) They are taxed as income for the employee, but are tax free upon withdrawal. c) They are not included as income for the employee, but are taxable upon distribution. d) They are never taxed.
C Funds contributed are excluded from the employee's current taxable income, but are taxable upon withdrawal.
If the Director requests information regarding a claim, within how many days must the insurer provide a response? a) 3 days b) 10 days c) 21 days d) 31 days
C Upon an inquiry about a claim from the Director, the insurer must furnish an adequate response within 21 days.
Under a Key Person disability income policy, premium payments a) Are made by the employee and are not tax-deductible. b) Are made by the employee and are tax-free. c) Are made by the business and are tax-deductible. d) Are made by the business and are not tax-deductible.
D Premiums are nondeductible to the business; however, benefits are received tax-free by the business.
A Straight Life policy has what type of premium? a) An increasing annual premium for the life of the insured b) A decreasing annual premium for the life of the insured c) A variable annual premium for the life of the insured d) A level annual premium for the life of the insured
D Straight Life policies charge a level annual premium for the lifetime of the insured and provide a level, guaranteed death benefit.
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated? a) Annuity certain b) Fixed annuity c) Refund life d) Variable annuity
A Annuity Certain option allows the annuitant to select the time period or the amount of the benefits to be paid out. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.
A 70-year-old individual who bought a Part B Medicare policy 2 months ago just began kidney dialysis treatments this week. The individual is now applying for a Medicare supplement policy, which would begin in 8 months. Which of the following could the insurer do to avoid paying for the dialysis? a) Declare a pre-existing condition b) Permanently exclude coverage for dialysis c) Deny the supplement policy d) Charge a higher premium
A If an applicant is aged 65 or greater and applies for Medicare supplement coverage while covered under Part B Medicare insurance, an insurer cannot alter the price of coverage based on prior claims experience or health status, provided that the application was made during the first 6 months of Part B coverage. The insurer may, however, exclude benefits during the first 6 months based upon a pre-existing condition for which the policyholder received treatment during the 6 months before it became effective.
All of the following statements about Medicare supplement insurance policies are correct EXCEPT a) They cover the cost of extended nursing home care. b) They cover Medicare deductibles and copayments. c) They supplement Medicare benefits. d) They are issued by private insurers.
A Medicare supplement policies (Medigap) do not cover the cost of extended nursing home care. Medigap plans are designed to fill the gap in coverage attributable to Medicare's deductibles, copayment requirements, and benefit periods. These plans are issued by private insurance companies.
Which statement is NOT true regarding a Straight Life policy? a) Its premium steadily decreases over time, in response to its growing cash value. b) The face value of the policy is paid to the insured at age 100. c) It usually develops cash value by the end of the third policy year. d) It has the lowest annual premium of the three types of Whole Life policies.
A Straight Life policies charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death benefit.
An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued? a) Adjust the claim benefit to reflect the insured's true age b) Deny any claims and cancel the policy c) Deny paying a claim based on misrepresentation d) Pay the full amount of a claim because the contestable period has ended
A The Misstatement of Age provision says that if a client has misstated her age, whether intentional or unintentional, they will adjust the benefit being paid. It doesn't matter when the mistake was found.
Which of the following options best depicts how the eligibility of members for group health insurance is determined? a) By conditions of employment b) Eligibility is not determined, but simply accepted c) By the physical conditions of the applicants at the time of employment d) In such a manner as to establish individual selection as to the amounts of insurance
A The individual employer normally must provide insurance coverage to all full-time employees. The employer can specify within some limitations how many hours are considered full time, and whether both salaried and hourly employees will be covered. The employer can also legally exclude a particular group of employees from the eligible class of employees.
An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan? a) 2 years b) 1 month c) She would not receive any benefits. d) 3 years
A Under an Own Occupation plan, if the insured cannot perform his/her current job for a period of up to two years, disability benefits will be issued, even if the insured would be capable of performing a similar job during that two-year period. After that, if the insured is capable of performing another job utilizing similar skills, benefits will not be paid.
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called a) Payor rider. b) Cost of living rider. c) Accelerated benefit rider. d) Living need rider.
B "cost of living" rider adjusts the face amount of a policy to maintain the relationship of the face amount and increases in the cost of living.
What type of policy contains a coverage that is only activated upon the insured's losses reaching a certain level? a) Modified fully insured plan b) Partially funded plan c) Modified coverage d) Fully funded plan
B In a partially funded plan, coverage is only activated upon the insured's losses reaching a certain level. It may take the form of a maximum aggregate limit payable or a maximum limit payable for any one event.
Which statement best defines a Multiple Employer Welfare Arrangement (MEWA)? a) A group health plan that covers medical expenses arising from work related injuries b) A joining together by employers to provide health benefits for employee c) A plan that provides hospice care for terminally ill employees d) A government health plan that provides health care for the unemployed
B A MEWA provides benefits for a number of member groups.
A Medicare SELECT policy does all of the following EXCEPT a) Provide for continuation of coverage in the event that Medicare SELECT policies are discontinued due to the failure of the Medicare SELECT program. b) Prohibit payment for regularly covered services if provided by non-network providers. c) Make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare SELECT policy to each applicant. d) Provide payment for full coverage under the policy for covered services not available through network providers.
B A Medicare SELECT policy issued in this state must not restrict payment for covered services provided by non-network providers if the services are for symptoms requiring emergency care and it is not reasonable to obtain such services through a network provider.
What type of group insurance plan has benefits that are a result of a collective bargaining agreement between a labor organization and an employer? a) Labor union b) Modified fully-insured plan c) Conventional fully-insured plan d) Partially-funded plan
B A modified fully-insured plan is a plan whose benefits are a result of a collective bargaining agreement between a labor organization and an employer, and the benefits are to be administered and paid by an insurance company.
A tax-sheltered annuity is a special tax-favored retirement plan available to a) Certain groups depending on factors such as race, gender, and age. b) Certain groups of employees only. c) Anyone. d) Certain age groups only.
B A tax-sheltered annuity is a special tax-favored retirement plan available only to certain groups of employees (nonprofit charitable, educational, religious, and other 501c(3) organizations, including all employees in public education).
What type of benefit plan is a managed plan that is developed in conjunction with the Health Benefit plan committee? a) Open Care Plan b) Basic Coverage Benefit Plan c) Catastrophic Coverage Benefit Plan d) Small Employee Carrier Plan
B Basic Coverage Benefit Plan is a managed plan developed in conjunction with the Health Benefit plan committee. The Basic Coverage Benefit Plan is lower in cost than the Standard Benefit Plan.
An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would a) Pay half of her claim because the insured had an outstanding premium. b) Pay the claim. c) Hold the claim as pending until the end of the grace period. d) Deny the claim.
B Because the accident occurred during the grace period, the insurance company will pay the claim.
The limits of a health reimbursement account are set by a) Federal regulation. b) The employer. c) State statutes. d) The insurer.
B Health Reimbursement Accounts have no statutory limit. Limits may be set by employer, and rollover at the end of the year based on employer discretion.
Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care? a) Community-based organization professionals b) Attending physician c) Registered nurses d) Licensed practical nurses
B Home health care is care provided in one's home and could include occasional visits to the person's home by registered nurses, licensed practical nurses, licensed vocational nurses, or community-based organizations like hospice. Home health care might include physical therapy and some custodial care such as meal preparations.
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant a) Prior to filling out an application for insurance. b) With the policy. c) Upon issuance of the policy. d) Within 30 days after the first premium payment was collected.
B If a life insurance policy contains a free-look period of at least 10 days, the buyer's guide can be delivered with the policy. If it doesn't, the buyer's guide must be delivered prior to accepting the initial premium.
When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision a) Because the misstatement occurred more than 2 years ago, it has no effect. b) Amounts payable under the policy will reflect the insured's correct age. c) The contract will be deemed void because of the misstatement of age. d) The elimination period will be extended 6 months for each year of age misstatement.
B If an insured misstates his or her age upon policy application, the optional misstatement of age provision will change the payable benefit to that which would have been purchased at the insured's actual age.
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a) The date of application b) The date of medical exam c) The date of policy delivery d) The date of issue
B If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.
All of the following statements describe a MEWA EXCEPT a) MEWAs can be self-insured. b) MEWAs are groups of at least 3 employers. c) MEWAs can be sponsored by insurance companies. d) MEWA employers retain full responsibility for any unpaid claims.
B MEWAs are groups of at least 2 employers who pool their risks to self-insure. MEWAs can be sponsored by an insurance company, an independent administrator, or another group established to provide group benefits for participants.
Which of the following is NOT a goal of risk retention? a) To fund losses that cannot be insured b) To minimize the insured's level of liability in the event of loss c) To reduce expenses and improve cash flow d) To increase control of claim reserving and claims settlements
B Retention usually results from three basic desires of the insured: to reduce expenses and improve cash flow, to increase control of claim reserving and claims settlements, and to fund losses that cannot be insured.
What is the main purpose of the Seven-pay Test? a) It guarantees interest minimum. b) It determines if the insurance policy is an MEC. c) It requires level premium payments for 7 years. d) It ensures that the policy benefits are paid out in 7 years.
B The Seven-pay Test determines whether an insurance policy is "over-funded" or if it's a Modified Endowment Contract. In other words, the cumulative premiums paid during the first seven years of a policy must not exceed the total amount of net level premiums that would be required to pay the policy up using guaranteed mortality costs and interest.
An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? a) 7 days b) 10 days c) 31 days d) 60 days
B The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a) Straight whole life b) Universal life c) Variable life d) Decreasing term
B The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.
Which of the following would not be a violation of State insurance regulations? a) Producer B charges his clients, in addition to the premium, a consulting fee. b) Producer C uses her license to write uncontrolled business only. c) Producer D collects premiums due on policies and deposits the funds in his own personal account. d) Producer A uses her license to write only insurance for herself and her immediate family.
B The purpose of a license is to primarily write non-controlled business.
Which of the following would help prevent a universal life policy from lapsing? a) Corridor of insurance b) Target premium c) Face amount d) Adjustable premium
B The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.
During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal? a) Neither interest nor principal is taxed, but penalties may be imposed. b) Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½. c) Nontaxable principal may be withdrawn first, but the 10% penalty will be imposed if under age 59 ½. d) Both interest and principal are taxed; no other penalties are imposed.
B When money is withdrawn from the annuity during the accumulation phase, the amounts are taxed on a last in first out basis (LIFO). Therefore, all withdrawals will be taxable until the owner's cost basis is reached.
An IRA purchased by a small employer to cover employees is known as a a) Defined contribution plan. b) 403(b) plan. c) Simplified Employee Pension plan. d) 401(k) plan.
C A Simplified Employee Pension (SEP) is an employer sponsored IRA. Contributions to the plan are not included in the employee's taxable income for the year, to the extent that they do not exceed the maximums allowed. Distributions from a SEP are taxable as ordinary income when received at retirement.
What is franchise insurance? a) It is group insurance b) It is blanket insurance c) It is health coverage for small groups whose numbers are too small to qualify for true group insurance d) It provides insurance for franchises, such as a restaurant or hotel chain
C Franchise insurance provides health coverage for small groups whose numbers are too small to qualify for true group insurance. Franchise insurance is not group insurance, since individual policies are issued for each participant. Individual underwriting is done for each person, submitting his or her own application and medical history. Premiums charged are generally less than for an individual policy, but more than group coverage.
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? a) $10,000, 60 days b) $10,000, 30 days c) $8,000, 60 days d) $8,000, 30 days
C Generally, IRA rollovers must be completed within 60 days from the time the money is taken out of the first plan. If the distribution from the first plan is paid directly to the participant, 20% of the distribution must be withheld by the payor.
When would life insurance policy proceeds be included in the insured's taxable estate? a) If the insured transfers ownership of the policy or makes a gift of the policy 5 years prior to his or her death b) When the beneficiary is named in the policy c) When there are any incidents of ownership at the time of death d) If the insured's spouse is the policyowner
C If the insured were the owner of the policy at the time of death or possessed any incidents of ownership at the time of death, the value of the policy will be included in the insured's taxable estate. If the insured, as policyowner, assigns or transfers ownership of the policy or makes a gift of the policy within 3 years prior to his or her death, the entire face amount of the policy will be included in his or her taxable estate.
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that? a) Agent's Report b) Underwriter's Report c) Inspection Report d) Medical Information Bureau's report
C Inspection reports cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.
All of the following statements are true regarding installments for a fixed amount EXCEPT a) This option pays a specific amount until the funds are exhausted. b) The annuitant may select how big the payments will be. c) The payments will stop when the annuitant dies. d) Value of the account and future earnings will determine the time period for the benefits.
C Installments for a fixed amount option has no life contingencies. A specific amount of benefits will be paid until funds are exhausted whether or not the annuitant is living.
In long-term care (LTC) policies, as the benefit period lengthens, the premium a) LTC premiums are not based on benefit periods. b) Decreases. c) Increases. d) Remains unchanged
C LTC policies define the benefit period for how long coverage applies, after the elimination period. The longer the benefit period, the higher the premium will be.
Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income? a) 5% b) 7% c) 10% d) 15%
C Most people who itemize their deductions can claim deductions for unreimbursed medical expenses, those that are not covered by health insurance, that exceed 10% of their adjusted gross income.
Fred and Jody are covered under a group health insurance plan at his place of employment. When Jody gave birth to their first child, what must he do in order to have coverage for their child? a) Notify the employer within 10 days b) Notify the insurer immediately and provide proof of insurability c) Notify the insurer within 31 days in order for coverage to continue without any evidence of insurability d) Notify the insurer on the anniversary date of the plan
C Newborn coverage is provided at the moment of birth, and it will continue if the insurance company is notified within 31 days.
Which part of an insurance application would contain information regarding the applicant's medical history? a) Agent's report b) Part 1 c) Part 2 d) Inspection report
C Part 2 - Medical Information of the application includes information on the prospective insured's medical background, present health, any medical visits in recent years, medical status of living relatives, and causes of death of deceased relatives.
Which of the following is NOT true of Section 1035 Policy Exchanges? a) It is an IRS Code which permits like kind exchanges of property. b) It is typically used when exchanging or replacing a less competitive life policy with a more competitive life policy. c) Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days. d) It requires an absolute assignment of the existing policy to the replacing company who surrenders the contract and issues a replacement policy.
C Section 1035 of the Internal Revenue Code does not give a specific time limit to complete such an exchange.
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? a) As high b) Half the amount c) Lower d) Higher
C Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n) a) Flexible Annuity. b) Immediate Annuity. c) Equity Indexed Annuity. d) Variable Annuity.
C The interest rates of Equity Indexed Annuities are tied to the Standard and Poor's Index.
The sole proprietor of a business makes a total salary of $50,000 a year. This year, his medical expenses have reached a total of $75,000. What amount may the sole proprietor deduct in regards to his medical expenses? a) $10,000 b) $25,000 c) $50,000 d) $75,000
C The proprietors of a business may deduct the cost of a medical expense plan because they are considered to be self-employed individuals instead of employees. The deduction cannot legally exceed the taxpayer's earned income for the year even if the cost of the medical expense plan exceeds this amount (in this scenario, $50,000).
Which of the following describes self-insurance? a) A company purchases a participating policy. b) An individual funds his or her own insurance policy. c) A business engages in the same types of activities as a commercial insurer and deals with its own risks. d) A plan to which the law of large numbers does not apply.
C Under some circumstances, it is possible for a business or other organization to engage in the same types of activities as a commercial insurer dealing with its own risks. When these activities involve the operation of the law of large numbers and predictions regarding future losses, they are commonly referred to as self-insurance.
An insured pays her Major Medical Insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would a) Hold the claim as pending until the end of the grace period. b) Deny the claim. c) Pay half of her claim because the insured had an outstanding premium. d) Pay the claim.
D Because the accident occurred during the grace period, the insurance company will pay the claim.
Concerning group Medical and Dental insurance, which of the following statements is INCORRECT? a) Benefits received by the employee are free from federal income tax. b) Premiums paid by the employer are deductible as a business expense. c) Employee paid premiums may be deducted if certain conditions are met. d) Employee benefits are tax deductible the year in which they were received.
D For group medical and dental expense insurance any premium paid by the employer is deductible as a business expense. However, any premiums provided by the employee are only deductible if certain conditions are met. Group medical and dental expense benefits are received income tax free by the employee.
Which statement regarding insurable risks is NOT correct? a) Insurance cannot be mandatory. b) The insurable risk needs to be statistically predictable. c) An insurable risk must involve a loss that is definite as to cause, time, place and amount. d) Insureds cannot be randomly selected.
D Granting insurance must not be mandatory, selecting insureds randomly will help the insurer to have a fair proportion of good risks to poor risks. All other statements are true.
Which of the following would not be a violation of State insurance regulations? a) Producer D collects premiums due on policies and deposits the funds in his own personal account. b) Producer A uses her license to write only insurance for herself and her immediate family. c) Producer B charges his clients, in addition to the premium, a consulting fee. d) Producer C uses her license to write uncontrolled business only.
D The purpose of a license is to primarily write non-controlled business.
The term "illustration" in a life insurance policy refers to a) A depiction of policy benefits and guarantees. b) Pictures accompanying a policy. c) Charts and graphs. d) A presentation of non-guaranteed elements of a policy.
D The term "illustration" means a presentation or depiction that includes non-guaranteed elements of a policy of individual or group life insurance over a period of years. Illustrations must also include name of the insurer and the agent, information about the proposed insured and the policy itself.
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT a) It will pay the benefit only for a designated period of time. b) The payments are not guaranteed for life. c) The insurer determines the amount for each payment. d) It is a life contingency option.
D Under the installments for a fixed period annuity settlement option, the annuitant selects the time period for the benefits; the insurer determines how much each payment will be. This option pays for a specific amount of time only, and there are no life contingencies.
The benefits received by the business in a Disability Buy-Sell policy are a) Income tax free. b) Tax deductible. c) Partially taxable. d) Fully taxable.
A In disability buy-sell policies, whether cross purchase or entity, the benefits are received income tax free by the business, but the premiums are not deductible to the business.
Which type of dental care would cover operative treatment of the mouth? a) Orthodontics b) Oral surgery c) Restorative d) Endodontics
B Oral surgery treatments involve operative treatment of the mouth, such as wisdom teeth extractions.
Paul is a producer in Washington and wants to become a producer in Oregon. The Director will waive certain examination requirements, provided that Washington would waive these same requirements if an Oregon producer sought licensure in Washington. What term is used to describe this phenomenon? a) Fair exchange b) Equanimity c) Reciprocity d) Equality
C "Reciprocity" occurs when the state in which the person resides accords the same privilege to residents of Oregon.
At what point must an Outline of Coverage be delivered? a) At the time of application or upon delivery of the policy b) At any point up to 30 days after policy delivery c) At the time of application only d) Upon delivery of the policy only
A An Outline of Coverage must be delivered at the time of application or upon delivery of the policy.
When an annuity is written, whose life expectancy is taken into account? a) Annuitant b) Beneficiary c) Life expectancy is not a factor when writing an annuity. d) Owner
A The annuitant receives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but do not have to be.
Which of the following individuals must have insurable interest in the insured? a) Producer b) Policyowner c) Beneficiary d) Underwriter
B The policyowner must have an insurable interest in the insured (his/her own life if the policyowner and the insured is the same person), or in the life of a family member or a business partner.
Which nonforfeiture option has the highest amount of insurance protection? a) Conversion b) Decreasing Term c) Reduced Paid-up d) Extended Term
D
Under a typical health insurance policy, claims that result from injuries while the insured was intoxicated or under the influence of drugs are generally a) Covered. b) Covered, but an extra premium is charged when a claim is filed. c) Covered with a 90 days' waiting period. d) Excluded.
D In individual or group medical expense policies any claims that result while the insured is intoxicated or under the influence of drugs (unless administered by a physician) are typically not covered.
All of the following statements about Medicare supplement insurance policies are correct EXCEPT a) They cover Medicare deductibles and copayments. b) They supplement Medicare benefits. c) They are issued by private insurers. d) They cover the cost of extended nursing home care.
D Medicare supplement policies (Medigap) do not cover the cost of extended nursing home care. Medigap plans are designed to fill the gap in coverage attributable to Medicare's deductibles, copayment requirements, and benefit periods. These plans are issued by private insurance companies.
How often may a life settlement provider contact an insured regarding the insured's health status if the insured's life expectancy is more than one year? a) Not more often than once a year b) Any time c) Once a month d) Once every 3 months
D The life settlement provider may contact an insured to request information regarding the insured's health status. The contacts cannot be made more often than every 3 months if the insured has a life expectancy of more than one year.
Which of the following statements about group life is correct? a) The cost of coverage is based on the ratio of men and women in the group. b) The premiums are higher than in an individual policy because there is no medical exam. c) The group sponsor receives a Certificate of Insurance. d) The policy can be converted to an individual term insurance policy.
A An Administrative-Services Only is an arrangement whereby an insurer agrees to provide certain services to a self-insured entity, such as providing printed claim forms, and the processing and auditing of claims. The insurer does not provide any insurance protection under an ASO arrangement.
An insurer hires a representative to advertise its company at a local convention. The representative lies about the details of some of the policies, in an attempt to secure more business for the company. Who is responsible for the representative's claims? a) The insurer b) The representative c) The underwriters d) The agent
A An insurer is completely responsible for advertisements regarding its company, regardless of who creates, presents, or distributes the material.