Insurance Exam QB

What is the tax consequence of amounts received from a Traditional IRA after the money was left in the tax-deferred account by the beneficiary?

Income tax on distributions and no penalty.

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?

$50,000

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

In a noncontributory health insurance plan, what percentage of eligible employees must participate in the plan before the plan can become effective?

100%

S is a sole business proprietor who owns a medical expense plan. What percentage of the cost of the plan may he deduct? a)25% b)50% c)75% d)100%

100%

How many days does an insurer have to file a notice of appointment for a producer?

15 days

HIPAA applies to groups of

2 or more.

If a new individual long-term care policyholder is not satisfied with a new policy, within how many days can the insured return the policy for a full premium refund? a)90 b)30 c)7 )10

30

What is the penalty for IRA distributions that are below the required minimum for the year?

50%

According to the PPACA rules, what percentage of health care costs will be covered under a bronze plan?

60%

How is emergency care covered for a member of an HMO? a)An HMO emergency specialist will cover the patient. b)A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area. c)A member of an HMO may receive care at any emergency facility, at the same cost as if in his or her own service area. d)HMOs have salaried member physicians, but they do not cover emergency care.

A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area.

Which of the following groups would probably be covered by blanket insurance? a)A university's sports team b)A large family c)A publishing company d)People who obtain temporary insurance

A university's sports team

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?

Indemnity

In reference to the standard Medicare Supplement benefits plans, what does the term standard mean?

All providers will have the same coverage options and conditions for each plan.

A Universal Life Insurance policy is best described as a/an

Annually Renewable Term policy with a cash value account.

Which of the following hospice expenses would NOT be covered in a cost-containment setting?

Antibiotics

Under the Age Discrimination in Employment Act, if the obligation of the employer to provide retiree health benefits, what will an individual younger than 65 receive in benefits each year?

At least the value of the Social Security benefits

At what point must an Outline of Coverage be delivered?

At the time of application or upon delivery of the policy

Which nonforfeiture option provides coverage for the longest period of time? a)Extended term b)Paid-up option c)Accumulated at interest d)Reduced paid-up

Reduced paid-up

Which of the following is TRUE about a class designation?

Beneficiaries are not identified by name.

Which of the following is a true comparison between annuities and life insurance?

Both annuities and life insurance use mortality tables.

Which of the following is true regarding inpatient hospital care for HMO members? a)Inpatient hospital care is not part of HMO services .b)Care can be provided outside of the service area. c)Care can only be provided in the service area. d)Services for treatment of mental disorders are unlimited.

Care can be provided outside of the service area.

Which of the following provides affordable health insurance for Utah residents who are considered uninsurable?

Comprehensive Health Insurance Pool Act

Which of the following would be considered an illegal inducement to purchase life insurance? a)Mailing an agency brochure to a prospective client b)Listing the insurance companies the agency represents in a letter c)Inviting prospective clients to the grand opening of the producer's new office d)Confirming future dividends in a life insurance proposal

Confirming future dividends in a life insurance proposal

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a)Representation b)Adhesion c)Consideration d)Good faith

Consideration

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT a)Late payments. b)Failure to pay off a loan. c)Disputes regarding consumer report information. d)Tax delinquencies.

Disputes regarding consumer report information.

What is the goal of the HMO?

Early detection through regular checkups

All of the following may be excluded from coverage in a Major Medical Expense policy, EXCEPT a)Cosmetic surgery. b)Coverage provided under workers compensation. c)Emergency surgery. )Custodial care.

Emergency surgery.

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)Equity Indexed Annuity. b)Variable Annuity. c)Flexible Annuity. d)Immediate Annuity.

Equity Indexed Annuity.

Which policy component decreases in decreasing term insurance?

Face amount

A producer is acting in what capacity when he or she is trying to obtain credible information about an applicant for health insurance?a)Office underwriter b)General agent c)Consumer report investigator d)Field underwriter

Field underwriter

Which of the following expenses is NOT covered by a health insurance policy?

Funeral

How are HMO territories typically divided?

Geographic areas

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?

Guaranteed surrender value

An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true? a)He will have to pay a penalty regardless of his age. b)He will not have to pay a penalty, regardless of his age. c)He cannot withdraw money from his MEC before age 59½. d)He will have to pay a penalty if he is younger than 59½.

He will have to pay a penalty if he is younger than 59½.

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

Illegal

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

Immediate annuity

All of the following are marketing arrangements used by insurers EXCEPT

Reinsurance System.

The Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT a)Coverage for preventive benefits .b)Individual tax deduction for premiums paid. c)Right to appeal. d)No lifetime dollar limits.

Individual tax deduction for premiums paid.

Which of the following statements pertaining to Medicare Part A is correct?

Individuals who have ALS automatically qualify for Medicare Part A, regardless of age.

Which of the following entities has the authority to make changes to an insurance policy?

Insurer's executive officer

All of the following statements about Medicare Part B are correct EXCEPT a)It is a compulsory program. b)It covers services and supplies not covered by Part A. c)It is financed by monthly premium d)It is financed by tax revenues.

It is a compulsory program.

Which of the following is true regarding a term health policy?

It is nonrenewable.

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant.

Which of the following statements is NOT correct concerning the COBRA Act of 1985? a)It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. b)It covers terminated employees and/or their dependents for up to 36 months after a qualifying event. c)It applies only to employers with 20 or more employees that maintain group health insurance plans for employees. d)COBRA stands for Consolidated Omnibus Budget Reconciliation Act.

It requires all employers, regardless of the number or age of employees, to provide extended group health coverage.

Which statement is NOT true regarding a Straight Life policy? a)It has the lowest annual premium of the three types of Whole Life policies .b)Its premium steadily decreases over time, in response to its growing cash value. c)The face value of the policy is paid to the insured at age 100. d)It usually develops cash value by the end of the third policy year.

Its premium steadily decreases over time, in response to its growing cash value.

Medicare Advantage is also known as

Medicare Part C.

Under a pure life annuity, an income is payable by the company a)For a guaranteed period of time, whether or not the annuitant survives to the end of that period. b)For as long as either the annuitant or a named beneficiary is alive. c)Only for the life of the annuitant. d)Until the principal and interest are exhausted.

Only for the life of the annuitant.

When calculating the amount a policyowner may borrow from a variable life policy, what must be subtracted from the policy's cash value?

Outstanding loans and interest

Traditional IRA contributions are tax deductible based on which of the following? a)How long the plan has been in force b)Owner's age c)IRA limit d)Owner's income

Owner's income

Under a disability income policy, the insurer does not pay a monthly benefit that is equal to the insured's previous income. The reason for paying a benefit amount that is less than the insured's income is to a)Enable the insurer to reduce variable costs. b)Prevent overutilization and malingering. )Prevent the insured from obtaining excess insurance. d)Enable the insurer to provide affordable coverage.

Prevent overutilization and malingering.

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability is not required.

The Gramm-Leach-Bliley Act was passed to

Protect private customer information filed with a financial institution.

Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must a)Defend the report if the agency feels it is accurate. b)Change the report. c)Send an actual certified copy of the entire report to the consumer. d)Respond to the consumer's complaint.

Respond to the consumer's complaint.

Which type of retirement account does not require the owner to start taking distributions at age 72? a)Standard IRA b)Traditional IRA c)Roth IRA d)Nonqualified IRA

Roth Ira

When an employee covered under a health reimbursement account changes employers, the HRA

Stays with the employer.

Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called

Suitability.

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a)Survivorship insurance. b)Juvenile protection provision. c)Survivor protection. d)Life planning.

Survivor protection.

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

Taxation on accumulation

A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true? a)The amount of the distribution is reduced by the amount of a 20% withholding tax. b)No taxes are due since the plan participant is over age 59 1/2. c)There is a 10% early withdrawal penalty. d)The amount distributed is subject to ordinary income tax.

The amount of the distribution is reduced by the amount of a 20% withholding tax.

All of the following are ways in which a Major Medical policy premium is determined EXCEPT a)The coinsurance percentage. b)The stop-loss amount. c)The average age of the group. d)The amount of the deductible.

The average age of the group.

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary

An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy?

The capital amount in a lump sum

Which of the following is true regarding a waiver of a surrender charge on an annuity contract?

The charge may be waived if the annuitant is confined to a long-term care facility for at least 30 days.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability.

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? a)The insurer will pay the death benefit minus one month's premium. b)The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. c)The insurer will pay the full death benefit from the group policy to the beneficiary. d)The insurer will pay a reduced death benefit to the beneficiary.

The insurer will pay the full death benefit from the group policy to the beneficiary.

Which of the following is true regarding a market value adjusted annuity? a)The insurer bears all the market risk of changing interest rates. b)There are no penalties for a premature surrender of the annuity. c)It provides a level benefit payment. d)The owner is guaranteed a fixed interest rate for a specific period of time.

The owner is guaranteed a fixed interest rate for a specific period of time.

All of the following are general requirements of a qualified plan EXCEPT a)The plan must provide an offset for social security benefits. b)The plan must be communicated to all employees. c)The plan must be for the exclusive benefits of the employees and their beneficiaries. d)The plan must be permanent, written and legally binding.

The plan must provide an offset for social security benefits.

How are contributions to a tax-sheltered annuity treated with regards to taxation? a)They are never taxed. b)They are taxed as income for the employee. c)They are taxed as income for the employee, but are tax free upon withdrawal. d)They are not included as income for the employee, but are taxable upon distribution.

They are not included as income for the employee, but are taxable upon distribution.

Which of the following statements is most correct concerning the changing of an irrevocable beneficiary?

They can be changed only with the written consent of that beneficiary.

What is the purpose of the ADEA?

To prohibit age discrimination in employment

Which of the following terms is used to name the nontaxed return of unused premiums? a)Interest b)Surrender c)Dividend d)Premium return

dividend

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend a)Life income with period certain. b)Installment refund. c)Joint and survivor. d)Straight life.

straight life

A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid? a)The insured will have to select a plan from which to collect benefits. b)The benefits will be coordinated. c)Neither plan would pay. d)Each plan will pay in equal shares.

the benefits will be coordinated