L&H

At age 49, Caleb took a $20,000 distribution from his deferred annuity, of which $9,000 represents interest earnings. In addition to paying income tax, what else will Caleb probably have to pay? nothing a penalty tax of $900 a penalty tax of $1,100 a penalty tax of $2,000

$900

Hillary purchased a fixed deferred annuity from ABC Insurers and named her daughter, Bess, as annuitant and her husband, Charles, as beneficiary. Which of these parties is specifically authorized to make withdrawals from the annuity prior to annuitization? Hillary Bess Charles Hillary, Bess, and Charles

Hillary

All the following statements about the taxation of accidental death and dismemberment (AD&D) policy benefits are correct EXCEPT: The death benefit payable to an insured's beneficiary under an AD&D policy is not taxed. Any interest earnings paid are not taxed. The capital sum payable if the insured is dismembered is not taxed. To avoid taxes under all circumstances, the beneficiary of the death proceeds or an injured insured must receive these amounts in a lump sum.

Any interest earnings paid are not taxed.

Daniel is hospitalized with a neck injury. When he checks his disability income policy, he learns that he will not be eligible for benefits for 60 days, which means that his policy has a 60-day: elimination period probationary period nondisabling injury provision benefit period provision

Elimination period(also called the waiting period)

Why do most insurers require a waiting period of three to six months before the disability income benefit rider begins payments? Insurers want to make sure the disability is permanent before beginning payments. Most disabilities are permanent after three weeks; almost all are permanent after six months. They must meet federal disability waiting period requirements. They must be sure that the cost of at least six months of insurance is covered before they pay for the disability.

Insurers want to make sure the disability is permanent before beginning payments.

The Big Insurance Company sold Diane a long-term care policy. How long does Diane have to examine the policy and return it for a refund? 10 days 20 days 30 days 31 days

30

A recurrent disability occurs while the disability income policy is in force and within how many months of an earlier, related disability? 3 months 6 months 9 months 12 months

6 months

If a person receives funds directly from a qualified pension plan and intends to roll them over to an IRA. Within how many days must the rollover be completed? 30 days 60 days 120 days 180 days

60 days

To avoid immediate taxation of IRA funds paid to the IRA owner in a rollover IRA transaction, the owner must deposit the funds into the new IRA within how many days of receiving them? A)30 days B) 60 days C) 10 days D) 120 days

60 days

If an insurer plans to discontinue a group health insurance plan, it must notify the employer of its intent to do so at least how many days in advance? 30 days 60 days 90 days 180 days

90 days

Which plan began the use of risk pools and community ratings? A. Blue Cross/Blue Shield plan B. PSO C. PPO D. HMO

Blue Cross/Blue Shield

Both indexed annuities and market-value adjusted annuities are generally considered a form of: A) equity product B) securities-based product C) fixed annuity D) variable annuity

Fixed annuity

Andy is covered by a group disability plan. What will happen if he leaves his company to work for a competitor? He can keep his coverage under his former employer's disability income plan. His coverage under his former employer's group disability plan ends and cannot be converted to an individual policy. His coverage under his former employer's group disability plan ends but he may apply for a conversion policy to continue coverage. He must have a medical exam to receive continued coverage under his former employer's plan.

His coverage under his former employers group disability plan ends and cannot be converted to an individual policy.

Because insurers do not pay the proceeds of a life insurance policy to a minor because minors do not have the legal capacity to sign a binding receipt for the funds, what do they do if no adults are available to receive death benefits? Insurers hold the proceeds in trust until the child reaches maturity. The state receives the funds and holds them in escrow until the child is age 21. Insurers require the court to appoint a legal guardian before paying benefits to a minor child. Each state treats these situations differently

Insurers require the court to appoint a legal guardian before paying benefits to a minor child.

What impact did the Patient Protection and Affordable Care Act (PPACA, or ACA) have on the pre-existing conditions restriction found in most health insurance policies? It eliminated the use of pre-existing condition restrictions on all types of health insurance. It ended the use of pre-existing condition restrictions in long-term care and medical expense insurance. It ended the use of pre-existing condition exclusions in medical expense insurance only. It expanded the use of pre-existing conditions restrictions in health insurance policies.

It ended the use of pre-existing condition exclusions in medical expense insurance only.

An employee is insured under a $100,000 group life insurance policy. At his death, the proceeds are paid to his beneficiary in a lump sum. What are the tax consequences? The full death benefit is subject to income tax. $50,000 of the proceeds are subject to income tax. $25,000 of the proceeds are subject to income tax. None of the proceeds are subject to income tax.

None of the proceeds are subject to income tax.

Which of the following statements correctly describes the tax treatment of disability buy-out insurance? Premiums are not tax-deductible and benefit payments are tax-free. Premiums are not tax-deductible and benefit payments are taxable. Premiums are tax-deductible and benefit payments are tax-free. Premiums are tax-deductible and benefit payments are taxable.

Premiums are not tax-deductible and benefit payments are tax-free.

Department rules regarding replacement of insurance apply to which of the following? A. group life insurance B. changes to an insurance contract C. reduction in a policy's benefits or term D. credit life insurance

Reduction in a policy's benefits or term Replacement rules apply primarily to transactions in which an existing contract will be lapsed, forfeited, or surrendered; reduced in value, benefits, or term; reissued with any reduction in cash value; or used in a financed purchase.

John, age 62, retired early and is receiving Social Security retirement benefits. He has one child, Sara, age 16. What will happen if Sara is in a car accident and becomes disabled? Sara will be eligible to receive a monthly Social Security benefit until she reaches age 17. Sara will be eligible to receive a monthly Social Security benefit until she reaches age 19. Sara will be eligible to receive a monthly Social Security benefit until she reaches age 22. Sara will be eligible to receive a monthly Social Security benefit until her disability ends, whatever age that may be.

Sara will be eligible to receive a monthly social security benefit until her disability ends, whatever age that may be.

How are self-funded group health insurance plans funded? The employer funds and pays for member claims and benefits. The employer's premium payments are directed to the insurer from which the plans benefits and claims are paid. The employer's premium payments are directed into a state fund from which the plan's benefits and claims are paid. The employees fund and pay for member benefits.

The employer funds and pays for member claims and benefits.

Richard just retired at age 72 and owns a $500,000 life insurance policy. Because he no longer needs insurance protection, Richard would like to sell his policy and use the proceeds to travel during retirement. Which option would be best suited for this purpose? a viatical settlement an accelerated benefits settlement a life settlement a cash value settlement

a life settlement

Brenda owns a nonqualified deferred annuity. Through a Section 1035 exchange, she can exchange her annuity income tax-free for which of the following? an endowment policy or a nonqualified annuity a nonqualified annuity only a life insurance policy or a nonqualified annuity either a qualified annuity or a nonqualified annuity

a nonqualified annuity only

The owner of a whole life policy who qualifies for accelerated benefits under the policy's accelerated benefits provision can expect to receive: the policy's full cash value a return of premiums paid the policy's full death benefit a percentage of (but less than) the policy's death benefit

a percentage of (but less than) the policy's death benefit

The entire contract provision of a life insurance policy defines the full contract as including all the following EXCEPT: the policy document a copy of the signed application a terms of agreement document maintained in the insurer's home office an increasing term rider that was purchased with the policy

a terms of agreement document maintained in the insurer's home office

Which of the following levels of long-term care can be provided in adult day-care centers, respite centers, a nursing home, or a person's home? remedial care skilled nursing care intermediate care custodial care

custodial care

Which of the following types of life insurance policies would most likely be used to insure the declining balance of a home mortgage? decreasing term level term increasing term renewable level term

decreasing term

From a life insurance regulatory perspective, the primary problem with stranger-originated life insurance (STOLI) is that it is: taking up too big a share of the insurance industry's market viewed negatively by the general public not properly regulated essentially wagering on a stranger's life

essentially wagering on a stranger's life

If Chris is eligible for Social Security disability benefits, what is his work status? fully insured completely insured currently insured partially insured

fully insured

Art is interested in purchasing an immediate annuity. What is the maximum number of premium payments he can make towards its purchase? one two one per year There is no limit to the number of premium payments one can make into a deferred annuity.

one

The typical guaranteed insurability rider lets policyowners buy a specified amount of additional insurance on select policy anniversaries until a specified maximum age. The anniversaries are usually at which interval? at one-year intervals at two-year intervals at three-year intervals at five-year intervals

three year intervals

A type of permanent life insurance that lets the policyowner increase, reduce or even skip premium payments at will without the policy lapsing best describes: variable life insurance universal life insurance adjustable life insurance modified premium whole life insurance

universal life insurance

Sally is a 25-year-old clerk employed by Acme, Inc. Under Acme's employer-pay-all group life plan, Sally's coverage is $60,000. The value of what portion of that coverage is taxable to Sally? $10,000 $20,000 $30,000 $40,000

$10,000 - anything past 50k is taxable

Life insurers are prohibited from requiring disgruntled policyowners who want to sue the insurer from doing so within (that is, no later than): 30 days after the triggering event is noted 90 days after the triggering event is noted 6 months after the triggering event is noted 1 year after the triggering event is noted

1 year after the triggering event is noted

What is the required grace period for individual health insurance policies in Oregon? 10 days 30 days 31 days 1 month

10 days

The maximum family limit for Social Security retirement and survivors' benefits is generally in the range of: 50 percent to 95 percent of the worker's PIA 100 percent of the worker's PIA 150 percent to 175 percent of the worker's PIA 200 percent to 275 percent of the worker's PIA

150 percent to 175 percent of the worker's PIA

A claimant under an individual health insurance policy must give written notice of the claim to the insurer within how many days following a loss? 7 10 14 20

20

After completing a week's hospitalization, Stan enters a skilled nursing facility for additional care. How long will Medicare Part A pay all of the approved charges in the facility? 20 days six months one year Medicare will pay no skilled nursing facility costs.

20 days

Joanne purchases a Medicare supplement insurance policy but decides not to keep it. How many days does she have to return it for a full refund of the premium she paid? 10 14 21 30

30

Which of the following qualified plans is available only to non-profit organizations? defined benefit pension plan 403(b) plan 401(k) plan Section 457 plan

403(b) plan

Which one of the following best describes the effect that a 10 percent rate cap would have on an indexed annuity (IA) contract? A 10 percent rate cap limits the amount of interest credited to an IA to 10 percent, unless the participation rate applied to the index increase produces a higher rate. A 10 percent rate cap limits the amount of interest credited to an IA to 10 percent, even if the participation rate applied to the index increase produces a lower rate. A 10 percent rate cap limits the amount of interest credited to an IA to 10 percent. This is true regardless of whether the participation rate applied to the index increase produces a higher rate. A 10 percent rate cap limits the amount of interest credited to an IA to the participation rate applied to the index, if higher.

A 10 percent rate cap limits the amount of interest credited to an IA to 10 percent. This is true regardless of whether the participation rate applied to the index increase produces a higher rate.

In accordance with Section 1035 of the Tax Code, a deferred fixed annuity may be exchanged on a tax-free basis for all the following types of products EXCEPT: A. a whole life insurance policy B. an immediate fixed annuity C. a tax-qualified long-term care insurance policy D. a deferred variable annuity

A. a whole life insurance policy Section 1035 permits the tax-free exchange of an annuity for any other type of annuity, but not for a life insurance policy.

Which statement about residual benefit payments for partial disability is NOT correct? When the insured's income loss drops below 20 percent, residual disability benefits normally end. Residual benefits are calculated monthly. Almost all insurers require that the insured sustain a loss of at least 35 percent of income as a result of the partial disability before paying any benefits. Residual disability benefits can continue for the maximum benefit period the policy allows for total disability.

Almost all insurers require that the insured sustain a loss of at least 35 percent of income as a result of the partial disability before paying any benefits.

Alpha Corporation pays the premiums for its group medical, dental, disability, and long-term care insurance plans. Which statement is correct about the income tax consequences? The premiums for all of the policies are taxable income to the employees. The premiums are deductible income to the employees. Alpha can take an income tax deduction for all of the premiums it pays for all of the policies. Alpha can take an income tax deduction only for the premiums it pays for its medical plans.

Alpha can take an income tax deduction for all of the premiums it pays for all of the policies.

Which one of the following statements most correctly describes how interest-sensitive whole life and current assumption whole life insurance differ? A) Current assumption whole lifes premium can change over time, while the premium for interest-sensitive whole life does not change. B) Current Assumption policies guarantee minimum cash values while interest-sensitive policies do not guarantee a minimum cash value. C) Only Current assumption policies include an interest crediting feature. D) Neither current assumption whole lif enore interest-sensitive whole life permit changes to the policys death benefit.

Current Assumption policies guarantee minimum cash values while interest-sensitive policies do not guarantee a minimum cash value.

Which organization recommends that health insurance policies follow certain standard provisions to protect consumers? A.) U.S. Department of Commerce B.) American Council of Life Insurance (ACLI) C.) National Association of Insurance and Financial Advisors (NAIFA) D.) National Association of Insurance Commissioners (NAIC)

D- NAIC

Tom bought a $100,000 adjustable life insurance policy. With respect to that policy, all the following statements are correct EXCEPT: Tom can increase the death benefit under his policy if he proves insurability. If Tom wants to increase the amount of the death benefit by more than $50,000, he will have to buy a new policy. If Tom wants to change the premium, both he and the insurer must agree to the change. If Tom increases the amount of death benefit but does not increase his premium, the cash value growth slows or stops.

If Tom wants to increase the amount of the death benefit by more than $50,000, he will have to buy a new policy.

Which of the following statements about the net premium for a life insurance policy is NOT correct? It reflects two of the three premium factors: mortality and interest. It is the amount charged to the policyowner. For a single premium policy, the net premium is called the net single premium. For a flexible premium policy, the net premium is called the net level premium.

It is the amount charged to the policyowner.

The 12 mandatory provisions included in health insurance policies originated with: HIPAA the Affordable Health Care Act Medicare the NAIC

The NAIC

Which of the following statements is true regarding an insured executive bonus plan? A) the employer receives the death benefit B) the employer can choose the beneficiary C) The executive is the policy owner D) The executive pays the premium

The executive is the policy owner

Bob was covered by a $50,000 group life insurance policy when he decided to retire. If he chooses to convert the policy to an individual policy, which of the following statements is correct? He must first give evidence of insurability. The maximum amount of the new policy cannot be more than $50,000. He must apply for a conversion policy within 90 days of retiring. Bob must convert to a term policy.

The maximum amount of the new policy cannot be more than $50,000.

Which statement about determining the proper amount of life insurance is correct? The human life value approach is the most common method used today for determining the amount of insurance coverage that a person should have. The needs approach takes into account family financial goals and objectives. The human life approach takes into account a family's specific financial situation and objectives. When using the needs approach, the individual's personal earnings each year are calculated until retirement and discounted to their present value.

The needs approach takes into account family financial goals and objectives

Under a survivorship life insurance policy, when does the insurer pay the death benefit? A) when the younger insured dies B) When the older insured dies C) Upon the death of the first to die D) Upon the death of the second to die

Upon the death of the insured who dies second

A producer must be registered with the Financial Industry Regulatory Authority (FINRA) to sell which one of the following types of life insurance? A. interest-sensitive whole life insurance B. variable life insurance C. ordinary whole life insurance D. indeterminate premium whole life insurance

Variable life insurance

Increasing term insurance has which of the following? an increasing premium and an increasing death benefit an increasing premium and a level death benefit a level premium and a level death benefit a level premium and an increasing death benefit

a level premium and an increasing death benefit

A provision found in some deferred annuities, which allows surrender charge-free withdrawals if the interest rate credited to the accumulated value drops below a specified level, is called a(n): bailout provision surrender provision release provision nonforfeiture provision

bailout provision

Which health care professional is NOT a common primary care provider (PCP)? internist general practitioner obstetrician-gynecologist orthopedic surgeons

orthopedic surgeons

Dividend options apply to which of the following? term life insurance non-participating life insurance policies participating life insurance contractual dividend distributions participating life insurance policies when dividends are declared by the insurer

participating life insurance contractual dividend distributions participating life insurance policies when dividends are declared by the insurer

The type of Section 529 plan that lets parents "prepay" a child's tuition at participating in-state public colleges and universities is called a(n): deferred annuity plan college savings plan education savings plan prepaid tuition plan

prepaid tuition plan

All the following are generally regarded as estate planning uses for life insurance EXCEPT: reduce the value of one's estate avoid probate create an estate estate conservation

reduce the value of one's estate

Under a health insurance policy's unpaid premium provision, what may the insurer do with respect to unpaid premiums that the insured owes when a claim is made? The insurer can deduct this amount from the benefit it pays the insured. The insurer will typically bill the insured for the amount of the unpaid premium. The insurer will initiate legal action for any unpaid amount. The insurer will send a notice of premium to the insured.

The insurer can deduct this amount from the benefit it pays the insured.

Which payment arrangement do managed care plans like HMOs and PPOs typically use? A. fee-for-service B. pre-payment C. comprehensive D. specified

pre-payment

Alex earns $5,000 a month as an accountant. He suffers a disabling neck injury and is receiving $3,000 per month as a total disability benefit. If he is able to return to work part-time and can earn $2,500 a month, what would be his disability income benefit if the policy includes a partial disability benefit? $0 $1,000 $1,500 $2,500

$1,500

Medicare Part A provides reasonable and medically necessary hospital care for how long? 21 days 60 days 30 days Inpatient hospital care is not covered.

60 days

All the following statements about term life insurance are correct EXCEPT: A)It offers protection for a specified, limited period. B) It pays a benefit only if the insured dies during the specified period. C) Upon issue, it is generally less expensive than permanent insurance of comparable face amount. D) A small cash value gradually accumulates while the policy is in force.

A small cash value gradually accumulates while the policy is in force.

Liz earns a gross salary of $3000 per month and is covered under her employer's group disability income policy. She becomes totally disabled and receives a monthly benefit payment of $1,800 per month. The benefit does not match her original salary because: Federal law mandates that DI policies cannot pay benefits exceeding 60% of the insured's gross income. Aa DI policy will not replace full gross income, since doing so promotes malingering. The employer is trying to minimize the cost of her disability. The employer contributes the difference to match the original salary.

Aa DI policy will not replace full gross income, since doing so promotes malingering.

Which statement about the Health Insurance Portability and Accountability Act (HIPAA) is NOT correct? HIPAA provides an important guarantee to eligible people who have lost employer-provided health coverage. HIPAA guarantees that all insurance companies that sell individual health insurance plans must offer them to eligible persons who have lost their group coverage, regardless of the person's health. HIPAA protects those who are no longer covered by an employer's health insurance plan or its benefits. HIPAA became law in 1996.

HIPAA protects those who are no longer covered by an employer's health insurance plan or its benefits.

How can a life insurance policyowner use his policy's cash value to help fund his retirement without incurring any taxes on the transaction even if the cash value exceeds his basis in the policy? He can use the cash value to buy mutual funds. He can use the cash value to buy CDs. He can use the cash value to buy tax-free municipal bonds. He can use the cash value to buy an annuity through a 1035 exchange.

He can use the cash value to buy an annuity through a 1035 exchange.

With respect to owning a traditional IRA, which of the following statements is true if an individual is covered by an employer-sponsored qualified plan? He or she cannot own a traditional IRA. He or she can own and contribute to an IRA, but no deduction can be taken for amounts contributed to it. He or she can own and contribute to an IRA, and may take a deduction for the full contribution amount regardless of income. He or she can own and contribute to an IRA, but deductions may be limited for amounts contributed into it based on income.

He or she can own and contribute to an IRA, but deductions may be limited for amounts contributed into it based on income.

under the transfer for value rule, the portion of a life insurance death benefit recognized as taxable income is calculated in which of the following ways A) the gain is calculated as the cash surrender value plus the purchase price of the policy minus premiums paid by the new owner B) The gain is calculated as the death benefit minus the cash surrender value of the policy and minus premiums paid by the new owner. C) The gain is calculated as the death benefit plus the purchase price of the policy plus premiums paid by the new owner. D) The taxable gain is calculated as the death benefit minus the purchase price and minus premiums paid by the new owner.

The taxable gain is calculated as the death benefit minus the purchase price and minus premiums paid by the new owner.

Which one of the following statements most correctly describes the transfer-for-value rule in life insurance taxation? When life insurance policies are sold or transferred to another party for valuable consideration, the beneficiary may be subject to income tax when the death benefits are paid. When life insurance policies are sold or transferred to another party for valuable consideration, the funds will be included in the beneficiary's estate when he or she dies. If a life insurance policy is transferred for value, the death benefit is fully taxable. If a life insurance policy is transferred for value, the death benefit is tax free.

When life insurance policies are sold or transferred to another party for valuable consideration, the beneficiary may be subject to income tax when the death benefits are paid.

May one person qualify as a group and be eligible for group health insurance coverage? Yes, in some states a business group of one can qualify as a small group. Yes, if the coverage includes dependents. Yes, if the business is not a sole proprietorship. No, one person never constitutes a business group.

Yes, in some states a business group of one can qualify as a small group.

Which insurance company function calculates company mortality and morbidity rates as well as the dividends on participating life insurance policies? A) Claims division B)Actuarial division C)Sales Division D) Underwriting division

actuarial division

Samantha spends 182 days in the hospital. At what point in her hospital stay will Medicare Part A no longer pay any benefits unless she draws from her lifetime reserve? after 30 days after 90 days after 100 days after 150 days

after 90 days

Peggy ended her employment with ABC Company. After she exhausts her benefits under COBRA, HIPAA will guarantee that: all insurance companies that sell group health insurance must offer it to eligible people who have lost their group coverage, regardless of their health all insurance companies that sell individual health insurance plans must offer them to eligible people who have lost their group coverage, regardless of their health her former employer must offer to extend group health insurance to eligible former employees who have lost group coverage, regardless of their health her former employer must offer to extend group health insurance at 50 percent of the usual cost to eligible former employees who have lost their group coverage, regardless of their health

all insurance companies that sell individual health insurance plans must offer them to eligible people who have lost their group coverage, regardless of their health

A schedule of benefits in a group health insurance plan does NOT: allow individual selection set forth the terms of coverage reflect participant earnings, position, or length of service benefit everyone in the group

allow individual selection

Ken has a history of severe back pain. He applies for disability income coverage. Concerned about early and significant disability claims, what may the insurer add to address that special risk? a guaranteed insurability rider a multiple indemnity rider an impairment rider a nonrenewable (cancelable or term) policy

an impairment rider

How often may an insurer require an insured to submit to a physical examination during a pending claim? A) As often as reasonably necessary B) it depends on the terms of the policy C) at any time D) not more often than monthly

as often as reasonably necessary

Allen wants to use his life insurance policy as security for a loan, using the policy's cash value as the pledge. What is this called? absolute assignment ownership assignment loan assignment collateral assignment

collateral assignment

HMOs are managed care plans that: allow insureds to choose any health care provider connect the financing and the delivery of health care permit the insured to change health care providers are indemnity plans issued by insurance companies

connect the financing and the delivery of health care

HIPAA does NOT require an employer-sponsored health insurance plan to offer: portable health coverage carry-over of fulfilled coinsurance and deductible requirements under a former plan guaranteed coverage continuation of coverage after loss of job

continuation of coverage after loss of job

Which is characteristic of dental insurance indemnity policies? limited choice of providers deductibles and co-insurance coverage for cosmetic dentistry lower cost than prepaid dental insurance plans

deductibles and co-insurance

Dana bought a $100,000 whole life insurance policy at the age of 30. Twenty years later, Dana decides to use her policy's $20,000 cash value to buy $100,000 of term life insurance based on her current age of 50. This provides her with life insurance for about 14 years. What policy feature is Dana using? cash surrender option extended term option reduced paid-up insurance option policy loan and withdrawal provision

extended term option

How long must an insurer maintain a file containing every advertisement prepared for individual policies and typical advertisements for blanket, franchise, and group policies? one year two years three years four years

four years

Which one of the following can be funded only with a single lump-sum premium payment, but it distributes income payments over time beginning soon after purchase? immediate annuity deferred annuity variable annuity nonforfeiture annuity

immediate annuity

Which of the following statements regarding the taxation of death benefits paid from a group life insurance plan is correct? A) The death benefit is taxable in the year distributed, but interest earned on funds left with the insurer under a settlement option is tax free. B) Both the death benefit and interest earned on funds left with the insurer under a settlement option are income tax free. C) The death benefit is income tax free, but interest earned on funds left with the insurer under a settlement option is taxable in the year earned. D) Both the death benefit and interest earned on funds left with the insurer under a settlement option are taxable as ordinary income.

C) The death benefit is income tax free, but interest earned on funds left with the insurer under a settlement option is taxable in the year earned.

Why would a basic medical expense policy not be a good form of coverage for a person who visits his doctor very often? It has a high deductible. It covers accidental injuries only. It primarily covers hospital-related expenses. It is only available on a group basis.

It primarily covers hospital-related expenses.

Which statement about HIPAA is NOT correct? A) It applies to group health insurance plans that cover at least two people. B) It provides a source of insurance to eligible people who have lost employer sponsored health coverage. C) It guarantees that insurers that sell individual health plans must offer them to eligible persons who have lost group coverage, regardless of their health. D) it protects those who lose coverage under an employer's health insurance plan.

It protects those who lose coverage under an employers health insurance plan.

All the following are possible variations of a joint and survivor annuity settlement option EXCEPT: a. joint and 100 percent survivor option b. joint and one-half survivor option c. joint and two-thirds survivor option d. joint and 200 percent survivor option

Joint and 200 percent survivor option

When first meeting prospective insurance applicants, a producer must give them a document that explains the general features, benefits, and conditions of the type of insurance being considered, which is called a A. key points document B. policy summary C. buyer's guide D. prospectus

Key Points Document

Insurers that offer Medicare supplement insurance must, in addition to Plan A, offer at least: Plan C Plan C and Plan F Plan C or Plan F Plan D

Plan C or Plan F

For Medicare Supplement plans K and L, which statement is true? Plans K and L pay 50 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached. Plans K and L pay 100 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached. Plans K and L pay 70 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached. Plans K and L pay 20 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached.

Plans K and L pay 100 percent of Medicare coinsurance, co-pays, and deductibles after the insured's annual out-of-pocket limit is reached.

Jack bought a life insurance policy that will provide a lump-sum death benefit plus a ten-year stream of income should he die before a specified date. Five years after purchasing the policy, before the specified date, Jack died and the policy began paying a monthly benefit to his family for ten years. What type of policy did Jack buy? A) ten-year family protection policy B) ten-year family income policy C) survivorship life insurance policy D) ten-year family maintenance policy

Ten year family maintenance policy

Steve is the beneficiary of his mother's accidental death and dismemberment policy. At her death, he receives the policy's death benefit in a lump sum. Which statement is correct? The death benefit is not taxable income. Only the capital sum is taxable. The entire death benefit is taxable income. Only the interest earnings are taxable income.

The death benefit is not taxable income.

Sky Corporation pays 80 percent of the premium for its group medical plan each year while the employees pay the remaining 20 percent. Which statement is correct about the deductibility of the premium payments from taxable income? The employees deduct any portion of the premium they pay. The employees cannot deduct any portion of the premium they pay. The employees can deduct the amount of premiums they pay that exceed 10 percent of adjusted gross income. The employees can deduct the amount of the combined premium payments that they and the employer contribute.

The employees can deduct the amount of premiums they pay that exceed 10 percent of adjusted gross income.

Replacement occurs if a life insurance policy is purchased and, in conjunction, any of the following happen EXCEPT: A) the existing policy is surrendered B) the existing policy is amended with a reduction in benefits C) The existing policy's beneficiary designation is changed D) The existing policy is converted to reduced paid-up insurance.

The existing policy's beneficiary designation is changed

Which of the following statements regarding third-party ownership of a life insurance policy is correct? The insured has no rights in the policy. The insured can access the policy's cash value but cannot designate the beneficiary. The insured cannot access the policy's cash value but can designate the beneficiary. The insured can designate the beneficiary and access the cash value, but cannot assign the policy to another third-party owner

The insured has no rights in the policy.

Policyowners can withdraw the interest earnings on their dividends or allow the interest to continue to accumulate. In either case, how is the interest treated for income tax purposes? The interest earned on the dividend is reported as taxable income in the year credited. The interest earned is tax deferred. The interest earned is not taxable. The interest earned on the dividend is taxable if withdrawn, but if paid out as part of the death benefit it is income tax free.

The interest earned on the dividend is reported as taxable income in the year credited.

Marilyn, 72, pays a lot for medical expenses. She wants to transfer assets to her son so that she can qualify for Medicaid. How will Medicaid's look-back rules apply to her? They will account for Medicaid benefits paid on her behalf during her first six months of Medicaid eligibility. They will account for Medicare benefits paid for care in a skilled nursing facility. They will consider the income, if any, that she earned during the 36 months before she applied for Medicaid. They will consider any transfers of assets she made during the 60 months before she applied for Medicaid.

They will consider any transfers of assets she made during the 60 months before she applied for Medicaid.

If a qualified retirement plan has a graded vesting schedule, covered employees typically become 100 percent vested in the employer-funded benefits in the: third year of participation fifth year of participation seventh year of participation tenth year of participation

seventh year of participation

Under standard exclusions, most insurers would deny coverage of which of the following? A) someone killed as a bystander during a bank robbery B) someone serving as an aircraft crew member C) someone flying as a passenger in a private plane D) someone flying as a passenger in a commercial airplane

someone serving as an aircraft crew member

Carol was 35 when she bought her deferred annuity. Now, at age 38, she wants to withdraw funds from the contract to take a vacation. Carol is likely to encounter all of the following consequences in making the withdrawal EXCEPT: surrender charges statutory minimum withholding requirements LIFO income tax treatment a 10 percent premature distribution tax penalty

statutory minimum withholding requirements

Which of the following most correctly describes the option(s) available with a universal life insurance policy the owner no longer wishes to maintain? a. surrender the policy for its cash value or convert it to extended term insurance b. surrender the policy for its cash value, convert it to extended term insurance, or convert it to paid-up whole life insurance c. surrender the policy for its cash value or convert it to paid-up whole life insurance d. surrender the policy for its cash value or let the policy continue without premiums until the cash value can no longer cover monthly deductions

surrender the policy for its cash value or let the policy continue without premiums until the cash value can no longer cover monthly deductions

Bob participates in a defined contribution retirement plan with his employer. The benefit Bob receives at retirement is basically determined by which of the following? the retirement benefit amount stipulated in the plan the amount of accumulated contributions and their interest earnings any conditions the employer establishes the plan's vesting schedule

the amount of accumulated contributions and their interest earnings

Information that is commonly asked on a health insurance application include all of the following EXCEPT: names and sex of the persons to be covered by the policy the applicant's opinion regarding the risk of disability or illness occurring medical histories of those to be covered frequency at which premiums to be paid

the applicant's opinion regarding the risk of disability or illness occurring

In a participating policy, the insurance company pays the policyowner a dividend out of which of the following? a fund maintained by each state's insurance department each whole life policy's cash values the company's divisible surplus set amounts prescribed in the policy

the company's divisible surplus

Under Social Security, what is the primary insurance amount (PIA)? the monthly benefit amount a person will receive if he or she elects to take benefits at full retirement age the average annual wage base upon which a person's retirement benefits are calculated the amount a worker contributed to the Social Security program over his or her working lifetime the monthly amount a person will receive if he or she elects to take benefits at the earliest age possible

the monthly benefit amount a person will receive if he or she elects to take benefits at full retirement age

If a lapsed life insurance policy is reinstated, the reinstated policy's premiums will be: greater than they were under the policy prior to its lapse either greater than or less than they were under the policy prior to its lapse, depending on how long the policy had been lapsed less than they were under the policy prior to its lapse the same as they were under the policy prior to its lapse

the same as they were under the policy prior to its lapse

A life insurance policy matures or endows when its guaranteed cash value equals its face amount. With an endowment contract, when does the policy endow? when the insured dies at age 120 after age 120 well before age 120, usually at age 65

well before age 120, usually at age 65

All the following statements about annuity death benefits are correct EXCEPT: A) If the owner or annuitant dies during the accumulation period, a beneficiary receives a death benefit at least equal to the amount invested in the contract. B) Variable annuities guarantee a death benefit equal to at least the premium invested minus previous withdrawals. C) All annuities provide a death benefit if the owner or annuitant does after the contract has been annuitized. D) All annuities provide a death benefit if the owner or annuitant dies during the accumulation period.

All annuities provide a death benefit if the owner or annuitant does after the contract has been annuitized.

Which entity spreads the cost of losses among its members by having each member pay a pro-rata share of these losses? risk retention group reciprocal insurer reinsurer self-insurer

reciprocal insurer

Sandra, a single mom, takes out a 'jumping juvenile' life insurance policy insuring her newborn daughter Karen. Which of the following riders would pay the policy's premiums if Sandra dies or becomes totally disabled? payor benefit rider disability income rider newborn rider waiver of premium

payor benefit rider

Annuity settlement options involving life contingencies include all of the following, EXCEPT: straight life income, or pure life income, option period certain option life income with guaranteed refund option life income with period certain option

period certain option

All the following are common forms of split-dollar plan EXCEPT: classic split-dollar reverse split dollar equity split-dollar qualified split-dollar

qualified split-dollar

An Oregon insurer is insolvent. The Life and Health Insurance Guaranty Association will perform all of the following EXCEPT loan money to the insurer. reinsure covered policies. assure payment of the insurer's contractual obligations to residents. provide funding to accomplish reinsurance or payment of the insurer's obligations.

loan money to the insurer

Which rider is NOT commonly found in a disability income policy? A) return of premium rider B)long-term care rider C)social insurance supplement rider D) guaranteed insurability rider

long-term care rider

Under the Old Age, Survivors, and Disability Insurance (OASDI) Program, eligible workers and their families may be entitled to receive all of the following EXCEPT: monthly retirement benefits survivor benefits disability benefits medical care benefits

medical care benefits

Actuaries calculate net single premiums based on which of the following? mortality and dividend assumptions morbidity and expense assumptions mortality and interest assumptions expense and mortality assumptions

mortality and interest assumptions

What rights, if any, does an insured person have in a policy when another person owns the policy? the right to review the policy the right to change the policy no rights the right to adjust the death benefit

no rights

When classifying insurance risks, insurance underwriters most often use the: numerical rating system judgment method adverse selection system risk assessment scale

numerical rating system

In helping a prospective customer determine the lump sum of money his survivors would need at his death, it's necessary for the agent to consider all the following EXCEPT: the insured's debt final medical expenses estate taxes ongoing monthly expenses

ongoing monthly expenses

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created which two categories of long-term care policies? long-term care and short-term care policies tax-qualified and non-tax-qualified LTC policies simple inflation protection and compound inflation protection LTC policies individual and group LTC policies

tax-qualified and non-tax qualified LTC policies

All of the following are common types of term life insurance EXCEPT: decreasing term variable term increasing term level term

variable term

Which entity does NOT mandate the minimum size of groups eligible for group health insurance? A) State B) IRS C) Department of Labor D) Insurer

Department of Labor

All of the following statements about health savings accounts (HSAs) are correct, EXCEPT: Health savings accounts are available on either an individual or a group basis. If an employer offers an HSA, employees must first have a high-deductible, high-cost insurance plan and set up an HSA account. Group HSAs must be entirely employee-funded. Employers cannot discriminate in any way when making HSA contributions.

Group HSAs must be entirely employee-funded.

Which of the following correctly defines the meaning of 'life insurance settlement' option? It is one of several ways a life insurer can reduce the benefit amount it is obligated to pay on a death claim. It is one of several ways a policyowner or beneficiary can choose to receive life insurance death benefit proceeds. It is one of several amounts a life insurer is prepared to offer in a contested death claim. It is one of several ways a life insurance policyowner can take a policy's cash value upon surrender of the policy.

It is one of several ways a policyowner or beneficiary can choose to receive life insurance death benefit proceeds.

Which statement is correct about a buy-up option in a disability income insurance policy for professionals? A) it lets the insured increase the maximum benefits to 100 percent of pre-disability earnings. B) it lets the insured buy more coverage in the future without evidence of insurability. C) it lets the insured buy coverage at rates for a higher occupational classification. D) it lets the insurer increase the premium over time.

It lets the insured buy more coverage in the future without evidence of insurability.

Billy, age 10, is insured under a juvenile life insurance policy purchased by his father, who pays the premiums. Which of the following riders would ensure that the insurance stays in force by waiving the premium payment if the father dies or becomes disabled? payor benefit rider waiver of premium rider disability income benefit rider payee benefit rider

payor benefit rider

With respect to life insurance settlement options, the term 'without life contingency' means: The death benefit payout is based on a specified period or amount, not on the life of the beneficiary. The beneficiary is a non-human entity. The benefit is paid out for as long as the beneficiary lives, however long that may be. The beneficiary is not permitted to choose the settlement option under any circumstances.

The death benefit payout is based on a specified period or amount, not on the life of the beneficiary.

If the insured dies during a life insurance policy's grace period without having paid the premium, what will be the insurance company's response? terminate the policy and pay nothing pay the policy's cash value after deducting the unpaid premium pay the death benefit after deducting the unpaid premium pay the full death benefit without reduction

pay the death benefit after deducting the unpaid premium