Insurance Final Exam

Which of the following statements is (are) true with regard to Roth IRAs? I. The portion of a Roth IRA distribution that is attributable to investment income is taxable. II. There is a maximum income level above which Roth IRA contributions are not allowed.

B

Which of the following statements is true with regard to the adequacy of IRA funds during retirement? I. To assure lifetime income, the IRA funds can be used to purchase a life annuity. II. The duration of IRA benefit payments depends on the rate of return earned on the invested assets after retirement and the withdrawal rate.

Both

All of the following statements about optional disability income benefits are true EXCEPT A) Under a cost-of-living rider, benefits are periodically adjusted for inflation. B) A Social Security rider pays additional benefits if the insured is turned down for Social Security disability benefits. C) Adding a return of premium rider results in a lower initial premium. D) Under an option to purchase additional insurance, the insured has the right to buy additional insurance at specified times without evidence of insurability.

C

Which of the following statements about the withdrawal of funds from a traditional IRA is true? A) Withdrawals of deductible contributions between the ages of 59.5 and 65 are subject to a tax penalty unless they are withdrawn because of specified circumstances such as death or long-term disability. B) Amounts attributable to nondeductible contributions are fully taxable as ordinary income when received. C) Withdrawals must begin no later than April 1 of the year following the calendar year in which an individual attains age 70.5. D) Withdrawals must be taken in the form of an annuity.

C

Which of the following statements is true concerning traditional and Roth IRAs? A) The investment income portion of Roth IRA distributions must be reported as taxable income. B) Roth IRA contributions are tax deductible. C) There are minimum distribution requirements for traditional IRAs. D) There are no limits on the tax deductibility of traditional IRA contributions once the account

C

Which of the following statements about eligibility requirements for qualified Health Savings Accounts (HSAs) is (are) true? I. Only individuals who are eligible for Medicare benefits can establish a qualified HSA. II. You must be covered by a high deductible health plan and not be covered by any other comprehensive health plan to establish a qualified HSA.

II only

Contributions to Roth IRA are tax deductible or made with after tax dollars?

Made with after tax dollars

Which of the following statements about high deductible health insurance plans is (are) true? I. Coverage under a high deductible health plan is necessary to establish a qualified health savings account (HSA). II. High deductible health plans provide a maximum limit on annual out-of-pocket expenses.

both

Which of the following statements is (are) true with regard to the inflation-indexed annuity option? I. The initial monthly payment is lower than the initial payment a fixed annuity would have provided if purchased at the same age. II. Periodic payments to the annuitant are adjusted for inflation.

both

All of the following statements about long-term care insurance are true EXCEPT A) Premiums can be reduced by electing shorter elimination periods. B) A common benefits trigger is the inability to perform a certain number of activities of daily living. C) Protection against inflation is usually made available as an optional benefit. D) Policies currently sold are guaranteed renewable.

A

Ellen purchased a health insurance policy. Under the renewal provision in the policy, the insurer has the right to terminate coverage on the policy anniversary date. This renewal provision is

optionally renewable

Which of the following statements about provisions in individual health insurance policies is true? A) If a policy is issued with a "guaranteed renewable" renewal provision, under no circumstances can the insurer raise the premium when the policy is renewed. B) After a policy is in force for 3 months, the time limit on certain defenses provision prohibits the insurance company from denying a claim based on a fraudulent misstatement in the application. C) The usual length of the grace period is 90 days. D) Under the reinstatement provision, a health insurance policy that has lapsed can be put back in force.

D

Which of the following statements is (are) true regarding the Roth IRA? I. Roth IRA contributions are tax deductible. II. Roth IRA investment income accumulates income-tax free.

II only