LH questions
what is the maximum penalty for habitual willful noncompliance with the fair credit reporting act
$2,500
at what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized
65
what is the required number of participants in a contributory group plan?
75%
two attorneys at law and operate their practice as a partnership. they want to start a program through their practice that will provide retirement benefits for themselves and three employees. they would likely choose
HR 10 Keogh Plan
the two types of assignments are
absolute and collateral
a universal life insurance policy is best described as
an annually renewable term policy with a cash value account
what product will protect an individual from outliving his or her money
annuity
an agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. who must then initial that change?
applicant
an insurer wants to begin underwriting procedures for an applicant. what source will it consult for the majority of its underwriting information
application
what is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
common disaster clause
what characteristic makes whole life permanent protection?
coverage until death or age 100
what component increases in the increasing term insurance
death benefit
what agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled
disability buy sell
for a retirement plan to be qualified, t must be designed for the benefit of
employees
the automatic premium loan provision is activated a the end of the
grace period
who makes up the medical information bureau
insurers
in the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. what is true concerning the policy premium?
it will likely be higher because the applicant is a substandard risk
under the fair credit reporting act, individuals rejected for insurance due to information contained in a consumer report
must be informed of the source of the report
qualified medical expenses paid for participants in a medical savings account are
not taxable
what provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss
notice of claim
a prospective insured receives a conditional receipt but dies before the policy is issued. the insurer will
pay the policy proceeds only if it would have issued the policy
what rider does not cause the death benefit to increase
payor benefit
what type of beneficiary is changeable at any point
revocable
what type of retirement account allows contributions to continue beyond age 70 1/2 and does not force distributions to start at age 70 1/2
roth IRA
if an agent wishes to sell variable life policies, what license must the agent obtain?
securities
equity indexed annuities
seek higher returns
a domestic insurer issuing variable contracts must establish one or more
separate accounts
the interest earned on policy dividends is
taxable
the limits of a health reimbursement account are set by
the employer
how do employer contributions to a health savings account affect the insured's taxes?
the employer contributions are not included in the individual insured's taxable income
who bears all the investment risk in a fixed annuity?
the insurance company
for the purpose of insurance, risk is defined as
the uncertainty or chance of loss
what is generally true regarding insureds who have been classified as preferred risks?
their premiums are lower
an insured makes regular contributions to his health savings account. how are those contributions treated in regards to taxation
they are tax deductible
S is a sole business proprietor who owns a medical expense plan. what percentage of the cost of the plan may he deduct
100%
to be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan?
18 months
HIPAA applies to groups of
2 or more
employers can reduce health plan costs by coupling a HRA with
a high deductible health plan
what is a feature of a disability buyout plan?
a lump sum benefit payment option
if a company has a simplified employee pension plan, what type of plan is it?
a qualified plan for a small business
occasional visits by what medical professionals will not be covered under LTCs home health care
attending physicians
life insurance death proceeds are
generally not taxed as income
the benefits received by the business in a disability buy sell policy are
income tax free
if a retirement plan or annuity is "qualified" this means
it is approved by the IRS
death benefits payable to a beneficiary under a life insurance policy are generally
not subject to income taxation by the federal government
an insured has a continuous premium whole life policy. she would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. what dividend option could she use
paid up option
which nonforfeiture option provides coverage for the longest period of time
reduced paid up
what type of life insurance policy generates immediate cash value?
single premium
events in which a person has both the chance of winning or losing are classified as
speculative risk
when an employee covered under a health reimbursement account changes employers, the HRA
stays with the employer
in comparison to consumer reports what is a unique characteristic of investigative consumer reports
the customer's associates, friends, and neighbors provide the report's data
the sole beneficiary of a life insurance policy dies before the insured. if the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to
the insured's estate
what would provide an underwriter with information concerning an applicant's health history?
the medical information bureau
under a simple plan what is true regarding taxation on both contributions and earnings
they are tax deferred until withdrawn
what is the purpose of a disclosure statement in life insurance policies?
to explain features and benefits of a proposed policy to the consumer
premiums paid by self employed sole proprietors or partners for medical expense insurance are
totally tax deductible
in insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. what contract element does this describe?
unilateral
for group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense
100%
how many consecutive months of coverage must LTC insurance provide in this state
12
regarding long term care coverage, as the elimination period gets shorter, the premium
gets higher
what provision in an insurance policy extends coverage beyond the premium due date
grace period
in LTC policies, as the benefit period lengthens, the premium
increases
when health care insurers negotiate contracts with health care providers or physicians to provide health care services for subscribers at a favorable cost, it is called
preferred provider organization
an Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is
403(b) plan (tsa)
premium payments for personally owned disability income policies are
not tax deductible
nonforfeiture values guarantee what for the policyowner
that the cash value will not be lost
if a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back
the balance of the loan will be taken out of the death benefit
if a life insurance policy has an irrevocable beneficiary designation...
the beneficiary can only be changed with written permission of the beneficiary
what would be an example of a limited accident and health insurance policy?
dread disease policy
what required provision protects against unintentional lapse of the policy
grace period
the medical information bureau was created to protect
insurance companies from adverse selection by high risk persons
if an applicant does not receive a new insurance policy, who would be held responsible
the agent
when a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount
equal to the original policy for as long a period of time that the cash values will purchase
what is the other term for the cash payment settlement option
lump sump
what is another term for the accumulation period of an annuity
pay in period
other than for a qualified life event, when can a change by made in benefits for a flexible spending account
during the open enrollment period
if an annuitant dies before annuitization occurs, what will the beneficiary receive?
either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
under a key person disability income policy, premium payments
are made by the business and are not tax deductible
an individual has been diagnosed with Alzheimer's disease. he is insured under a life insurance policy with the accelerated benefits rider. what is true regarding taxation of the accelerated benefits?
a portion of the benefit up to a limit is tax free; the rest is taxable income
how are HMO territories typically divided
by geographic areas
in disability income insurance, another name for the waiting period is the
elimination period
in life insurance policies, cash value increases
grow tax deferred
at the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. this rider is called
guaranteed insurability
most LTC plans have what feature?
guaranteed renewability
HSAs are designed to
help individuals save for qualified health expenses
when a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?
interest only
what would an advantage to naming a contingent beneficiary in a life insurance policy
it determines who receives policy benefits if the primary beneficiary is deceased
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 S&P 500. she would likely purchase
an equity indexed annuity
what is the benefit of choosing extended term as a nonforfeiture option
it has the highest amount of insurance protection
what program expands individual public assistance programs for people with insufficient income and resources
medicaid
what explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?
owner's rights
what is true concerning the taxation of premiums in a key person life insurance policy
premiums are not tax deductible as a business expense
for an individual who is not covered by an employer sponsored plan, IRA contributions are
tax deductible
your client wants to know what the tax implications are for contributions to a health savings account. you should advise her that the contributions are
tax deductible