Life, Accident and Sickness Day 3
S has life insurance with a face of $100,000 + an AD&D rider. S is hit by a train & died within 90 days of the accident. The death benefit will be ___________. The principal sum is ____________. If S lost both hands but didn't die, the _________ sum of ______________ will be paid.
$200,000; $100,000; capital; $100,000
An insured's major medical policy includes a $200 deductible and 80/20 coins. The insured incurs medical expenses totaling $1200. What will the insured pay?
$400
The survivor under a joint & full survivor annuity receives (half/100%) _______________ of the original joint income.
100%
within what period of time after completing the licensing class must a license be secured?
12 months
Dale incurs hospital expenses totaling $5,500. His major medical policy has a flat deductible of $300 and 80/20 coins. Dale will pay the first $__________ and his major medical will pay _______% of $5,200 or $___________. Dale will also pay the balance of $________________.
300; 80; $4160; $1040 (already paid ded, $1040 is billed)
Amanda is a teacher, she can participate in a _______ for her retirement. Based on her account value when she beings distribution she will receive $587/month. The (principal and interest/interest only)________ is taxable as income.
403B; principal and interest
A cancelable policy requires ________ days written notice of cancellation to the policy owner
5
Joan, 47, has an IRA. She needs a new car. If she takes out $14,000 to buy the car before age _________________, her early withdrawal penalty will be ______ and she will pay income taxes on the (full amount/50% of the amount)________________ withdrawn.
59.5; 10%; full amount
Notice of continuing disability is required every ___________
6 months
A policy that pays benefits directly to the health care provider is said to pay benefits on a A. service basis B. reimbursement basis
A
Andrew has a major medical policy with a $250 deductible and 80/20 coinsurance. Due to a serious accident, he incurred the following losses: $3,000 hospital expense, $2,000 physician's expense and a $1,250 loss of income. Andrew would be eligible for a benefit of: A. $3,800 B. $4,800 C. $4,750 D. $6,250
A
Carl purchased an annuity for $50,000 on 4/1/93. He received his first check on 5/2/93. What type of annuity did Carl purchase? A. immediate B. deferred
A
David is self-employed and sets up a retirement plan for himself. he most likely set up a A. HR-10 B. 403B C. simple plan D. 501C
A
David purchased a variable annuity. During the premium paying period the number of accumulation units in his account will A. continue to grow B. stay the same
A
Genie has an Indemnity Dental Plan. Of the following, which is true? A. the plan pays UCR (usual, customary and reasonable) B. the plan requires one to use a network provider
A
With a major medical policy, the initial amount the insured must pay before any insurance benefits are payable is the A. deductible amount B. coinsurance C. stop loss
A
M's life insurance became effective 3 months ago. he has paid $300 in premium to date. M died, his family received the $100,000 death benefit. This is an example of what type of contract?
Aleatory (unequal contract, one side gets all)
What type of annuity guarantees an income for a stated period of time whether the annuitant is alive or not?
Annuity Certain
A critical illness insurance policy pays benefits A. to the physician B. to the insured
B
A stop-loss provision is typically associated with A. basic hospital expense policies B. major medical expense policies C. disability income insurance D. all of the above
B
All of the following statements concerning qualified retirement plans are correct except: A. employer contributions to a qualified plan are tax deductible as a business expense B. employer contributions to a qualified plan on behalf of its employees are taxable as income to the employee when they are made C. The earnings of a qualified plan are not taxed until they are distributed D. employer-sponsored IRAs are considered qualified plans
B
Cynthia is scheduled to receive a $36,000 lump-sum distribution from her former employer's qualified pension plan and wishes to establish a rollover IRA to avoid paying taxes on the money that year. Within how many days must the rollover be completed to avoid paying taxes and penalties? A. 30 days B. 60 days C. 90 days D. 120 days
B
Which is an example of presumptive disability: (choose all that apply) A. A's left leg was amputated B. N was completely blinded C. M lost his right arm and right leg in an accident D. V was partially deafened by an inner ear injury
B & C
Example of a physical hazard to a home office UW
Bert is 60lbs overweight, loves fatty foods and appears to have no other bad habits
The ___________ Metal plan is the least expensive
Bronze
A vision insurance plan covers the full cost of which of the following: A. corrective lenses B. removal of cataracts C. eye exam D. cornea transplant
C
E's policy has a provision that allows him to renew the policy up to age 65 - with only one exception. The policy states that it may be terminated earlier if E loses his job. What type of policy renewal does E have? A. optionally renewable B. cancelable C. conditionally renewable D. term
C
Which of the following mandatory uniform policy provisions prevents an agent from waiving provisions in a health or life insurance contract? A. legal action B. time limit on certain defenses C. entire contract D. notice of claim
C
Which of the following would not be considered in UW life and or health insurance? A. credit rating B. medical history C. marital status D. personal habits
C
Y owns his own business. If he becomes disabled, his business overhead expense policy would cover all of the following except: A. his employee's salaries B. utility bills C. Y's salary D. insurance premiums
C
The most money that you would pay in a year for your healthcare A. coinsurance B. deductible C. stop loss D. cost sharing
C (aka MOOP)
All of the following employed persons who have no employer retirement plan would be eligible to set up a traditional IRA except: A. Miriam, 26, secretary B. Brent, 40, medical technician C. Edna, 72, nurse D. Jack, 60, plumber
C (have to be younger than 70.5)
For tax purposes, retirement plans can be divided into which of the following 2 categories? A. fixed & variable B. whole & term C. qualified & nonqualified
C (qualified - contributions made with pretax $$)
Example of a Moral Hazard to a home office underwriter
Cora did not disclose her use of prescription medication.
A policy is issued with an incomplete application and the insured dies. What is paid? A. incomplete applications void the contract B. if the incomplete application contains material information claim is not paid C. if death occurs during the contestable period it isn't paid D. claim is paid, it's assumed the insurer waived the questions
D
A signed statement of good health (health statement) is required when: A. the applicant submits the application and first premium B. the insured is released from the hospital after covered illness C. the insured applies for partial disability benefits D. the initial premium is paid at the time the policy is delivered
D
The amount payable in the event of the insured's death under an accidental death policy is called A. capital sum B. capital benefit C. dismemberment sum D. principal sum
D
The benefit that protects against the erosion of purchasing power for disability benefits is known as A. lifetime benefit B. offset rider C. rehabilitation benefit D. cost of living benefit
D
What are the tax consequences if Carl rolls over 20% of the $500,000 in his qualified plan? A. Carl must pay a 10% penalty tax on the $400k retained in the qualified plan B. Carl must pay a 10% penalty tax plus income tax on the $400k retained in the qualified plan C. Carl must only pay income taxes on the $400k retained in the qualified plan D. partial rollovers are permitted. Carl doesn't have to pay income taxes or the 10% penalty tax on the $400k.
D
Which definition of disability is the least favorable to the insured? A. own occupation B. two tiered C. they're all the same D. any occupation
D
Which of the following health insurance policies assures renewability, although the insurer reserves the right to change the premium rate on a class basis? A. cancelable B. optionally renewable C. conditionally renewable D. guaranteed renewable
D
All of the following are mandatory provision in health insurance except: A. proof of loss B. entire contract C. change of beneficiary D. misstatement of age
D (benefits the insurer, optional)
T/F: If H is injured in a car accident 10 days after obtaining a disability policy, he will be subjected to a 30 day probationary period before disability benefits will be paid.
False (30 day waiting period is for sickness, accidents are immediate coverage)
Example of a morale hazard to a home office UW
Hugh has been arrested twice for drinking and driving in the last year and has a reputation of being a heavy drinker
An insured has an individual disability income policy with a 30 day elimination period. He becomes disabled on June 1 for 15 days. When will be collect on his disability income payments?
No benefit (would have to be disabled at least 30 days)
Y/N: L, a word processing typist, is involved in an accident in which 3 fingers on one hand and 4 on the other are severed. Does she have total disability using "own occupation"? Y/N: Using the "any occupation" definition. Would L be considered totally disabled if she was qualified to teach word processing at the local college?
Yes; No
The period during which an annuitant is paying into an annuity is known as the ______________ period.
accumulation
In an AD&D policy, the dismemberment benefit is called...
capital sum
G buys a business overhead expense policy. The premium is (deductible/nondeductible)_____________; benefits are (taxable/tax-free)_________.
deductible; taxable
What "jumps" in a jumping juvenile policy?
the face amount
M has a life with 15-year Annuity Certain & dies after receiving a monthly income for 7 years. M's wife, as beneficiary will receive a monthly income annuity check for (the same/a reduced) _________ amount for (8/15) ____________ years.
the same; 8 years
Regarding waiver of premium provision: in event of (total/partial)__________ disability after a (waiting/probationary)__________ period has been satisfied, the insurer will ______________________ for the duration of the disability. Under Waiver of Premium in health insurance premiums would only be paid to age ____________.
total; waiting; waive or pay; 65/age of retirement
Ben has a straight life annuity, when he dies further payments (will/will not) ________ be paid to a beneficiary.
will not
M owns a disability policy. Her benefit is $3,000/month. How much of this is taxable to M each month?
$0 - she bought it. Only taxable if employer purchased plan.
K has a monthly benefit of $2500 for total disability. Under a residual disability income policy, if K suffers a 40% loss of his pre-disability income, how much will his benefit be?
$1000
L died after receiving $180/month for 6 years from a $25,000 installment refund annuity. His wife Helen, as beneficiary, would receive the same monthly income until her payments total _________
$12,040
Upon notification of claim, claim forms must be provided within _______ days
15
Notice of claim must be given to the insurer within _____ days
20
A health insurer may not be sued any later than _____ years after the claim was incurred
3
What is the grace period for an individual health insurance policy with a semi-annual premium?
31 days (1 month)
A rollover from a qualified plan into another must be completed within _____ days.
60
Proof of loss must be given to the insurer within _____ days
90
A guaranteed insurability rider may be attached to which of the following policies? A. disability income B. medical expense C. AD&D
A
If a life insurance policy fails the 7 pay test and is classified as a modified endowment contract A. policy loans are taxable as income & a 10% penalty is imposed on withdrawals B. policy loans are taxable as income C. A 10% penalty is imposed on the death benefit D. loans are not taxable
A
M gets benefit from her disability policy each month while totally disabled. She was covered under a group long term policy at work, paying her own premiums (assuming after tax dollars). Which of the following is true? A. benefits aren't reportable for tax purposes B. benefits are taxable as ordinary income C. first 6 months of benefits are taxable D. benefits are salary and treated as such
A
All of the following are optional provisions in individual health insurance except: A. illegal occupation B. grace period C. unpaid premium D. change of occupation
B
The following individuals are issued identical health policies with varying renewability provisions. All other factors being equal, who would pay the highest premium? A. F - optionally renewable B. J - noncancelable C. N - cancelable D. Y - conditionally renewable
B
The rider that provides more benefits during the first 6 months - 1 year of a claim is known as A. cost of living rider B. additional monthly benefits rider C. rehabilitation rider
B
What is the initial period of time specified in a disability policy that must pass after a policy is in force before a loss due to sickness can be covered? A. contestable term B. probationary period C. temporary interval D. elimination period
B
Which renewal provision allows an insurer to terminate a health insurance policy on any date specified in the policy and to increase the premium for any class of insured's? A. guaranteed renewable B. optionally renewable C. cancelable D. conditionally renewable
B
Which of the following statements pertaining to recurrent disability is not true? A. recurrent disability policy provisions continue the payment of benefits B. a recurrent disability doesn't begin a new benefit period C. a recurrent disability is one that the insured experiences more than once D. a new elimination period is required for recurrent disability if insured has been back at work for less than 6 months
D
T/F: If a health insurer fails to take action on an application for reinstatement within 30 days, the policy will be reinstated automatically.
False - w/in 45 days
N is involved in a plane accident that leaves him permanently deaf, no other injuries. N can still work. To what extent will N receive Presumptive Disability benefits?
Full benefit
Kevin's policy gives him the right to renew coverage up to age 65, but the company can still change the premium rate on a class basis. What type of policy is this?
Guaranteed Renewable
C claimed on her application for a disability policy that she didn't have dangerous hobbies when she went white water rafting often. How long does the insurer have to contest her claim before it loses the right to do so?
No time limit on fraud in health insurance
Diana, the beneficiary under her husband's AD&D policy, submits an accidental death claim on 9/1 following his death. However, the company denies the claim on the basis that death was due to natural causes. She decides to talk to her attorney. What is the earliest date for taking legal action against the insurer?
November 1 (60 days)
D is hospitalized with leukemia. His disability income policy won't pay any benefits until he has been totally disabled for 60 days. That would indicate that his policy probably has a 60 day _________
elimination period
The purpose of key person disability is to _________
indemnify the business to cover expenses incurred when a key person is disabled
The time of payment claims provision in a disability policy states that disability income payments must be paid at least ______________
monthly (or weekly - no longer between payments)
Judy is receiving the proceeds from her annuity. She died before receiving the guaranteed amount. The balance of the guaranteed amount will go to beneficiary. The amount is (taxable/not taxable)_________ to beneficiary.
not taxable
J has a disability policy that includes total & residual benefits. J loses his leg and can't perform the part of his job involving moving heavy stuff. Since he can do some, but not all of his job requirements, he is considered ________________ disabled.
partially
A statement a person makes believing it to be true is a _______
representation
This type of annuity provides payment for a specified period of time or until death of annuitant, whatever is first
temporary life annuity
The bank requires G to have insurance to cover a loan. What type of insurance would G use?
term
Sue has a major medical policy. Her medical expenses were $6,000. The deductible is $250, 80/20 coins above base plan, up to a coins limit of 20% of the first $5,000 after the deductible (=$1000 coins limit) the policy will pay 100% of covered expenses above $5,000. What is Sue's OOP expense? ________ How much will the insurer pay on the claim?
$1250; $4750
Copies of advertising must be maintained by the insurer for ______
4 years
A policy owner has left the proceeds to be paid to a primary and a contingent beneficiary, under a settlement option other than lump sum. However, before the entire principal amount has been paid out, the primary beneficiary dies. What happens to the remaining principal? A. it is paid to the contingent beneficiary B. it is paid to the primary beneficiary's estate
B
A child age 27 is determined to be physically dependent on parents. What will the health insurer do? A. child canceled at age 18 B. increase premium on child's portion C. cover child at same rate D. decline the extension
C
Gerald's hospital expense policy was reinstated Sept 1. He got sick and entered the hospital on Sept 5. Is the claim covered?
No. (10 day probation period)
A false representation, whether intentional or not is a ________
misrepresentation
M works full time and has a family. M can enter into an insurance contract when he is nearest his _______ birthday.
16th (be careful not to pick 15 because he might still be 14. MUST be at least 15)
To what age will the insurer pay the premium under the payor (benefit) provision? ______________
21
If replacement of an individual life insurance policy or individual annuity is going to occur as a part of a transaction for a new policy or a new annuity, which of the following must be notified? A. existing insurer B. agent C. commissioner
A
K has convertible life insurance. Which of the following is true? A. K won't need to verify evidence of insurability at time of conversion B. K will receive the conversion as of his original age C. K will have to go back to UW to be able to convert
A
On April 9, Sue paid her premium and was given a conditional receipt. She completed her medical exam on May 1. Policy issued as applied for and delivered by agent. Sue had coverage from.. A. date of medical exam B. date she paid initial premium
A
Policies that provide medical expense coverage for specific kinds of illnesses are known as A. critical illness policies B. risk policies C. simple risk policies D. wraparound policies
A
S & H have a policy insuring their lives that will pay the policy proceeds to the survivor regardless of which is the first to die. What type of policy is this? A. joint life B. adjustable life C. endowment D. survivor life
A
S agrees to pay premiums on her policy for 20 years. after that she won't have to pay premiums, but her insurance protection will continue until age 100. This is an example of A. limited pay B. endowment C. whole life D. adjustable life
A
Which is true regarding term option? A. insurance face amount remains the same, but coverage ends sooner B. coverage period remains the same, but the face amount changes
A
As opposed to life insurance an annuity is designed to protect an individual from the financial risk of A. dying B. outliving his/her resources C. not being able to provide for dependents D. having to create an estate
B
Before G died, he got $9,200 in monthly payments from his $15,000 straight life annuity. He was also insured under a $25,000 life insurance policy that named his wife D as primary beneficiary. Considering the two contracts, Darlene would receive death benefits totaling: A. $15,000 B. $25,000 C. $30,800 D. $40,000
B
Bruce signed an application for a disability policy. He paid the premium at time of delivery by agent. Bruce becomes insured when A. he signs the application B. he pays the initial premium
B
Frank's major medical policy has a $500 deductible with an 80/20 coins up to the first $10,000. What is the max he would have to pay on a claim? A. $2,000 B. $2,500
B
If a cash value life insurance policy is converted into an annuity in a nontaxable transaction it is called a A. rollover B. 1035 exchange C. modified endowment
B
In Feb, Wilt incurs his first medical expenses of the year, totaling $12,500. All of these expenses are covered by his major medical policy. The policy contains a $250 annual deductible and a 80/20 coinsurance. Of the total expense, how much will Wilt have to pay? A. $2,500 B. $2,700 C. $2,750 D. $3,000
B
N purchased a family income policy in 1980 with a 20 year income period. The base policy pays a death benefit of $50,000. N died in 1990. How will the policy be paid? A. death benefit paid, income distributed until 2010 B. death benefit paid, income distributed until 2000 C. death benefit paid
B
R died after receiving $95 per month from a $15,000 cash refund annuity for 11 years. The balance remaining will be paid to: A. no one, since R died B. R's beneficiary
B
S has her daughter L insured as a dependent on her Blue Cross policy. The insurer will pay the benefit to... A. the dependent (L) B. the hospital C. the policy owner (S)
B
When a variable annuity owner retires, the value of the annuity units assigned to his/her account A. remains unchanged B. may change from month to month
B
Which of the following doesn't trigger the guaranteed insurability option A. birth of child B. age 18 C. marriage D. age 25
B
Which of the following is an example of a non-cancellable policy? A. major medical B. whole life C. basic medical expense D. comprehensive
B
Which of the following organizations would be eligible for a 403B arrangement A. City Fire Department B. Public School System C. small business with less than 100 ees D. a close corporation
B
Which of the following would provide the highest level of benefit to an insured? A. major medical B. in network care C. non-network care
B
MIB reports may be given to the A. agent B. applicant C. policy owner D. records can't be given to anyone
B (usually also insurer)
F has purchased an annuity to provide retirement income. F is worried about losing the premium paid if death occurs before retirement income received equals the amount used to buy the annuity. What can F purchase to be sure the amount to be paid out will at least equal amount paid in? A. joint + survivor annuity B. joint life annuity C. cash refund annuity
C
In Feb, Wilt incurs his first medical expenses of the year, totaling $12,500. All of these expenses are covered by his major medical policy. The policy contains a $250 annual deductible and a 80/20 coinsurance. Assume that 6 months after Wilt's initial hospitalization, he is involved in a car crash and goes back to the hospital. The bill is $16,300, all of which his policy covers. How much of this claim will he have to pay? A. $3,200 B. $12,790 C. $3,260 D. $13,040
C
The expected incidence of sickness or disability within a given age group during a given period of time is the definition of A. risk pooling B. law of large numbers C. morbidity D. mortality
C
The penalty for premature withdrawal of funds from a traditional IRA is A. 5% or $50, whatever is less B. 10% of the account balance C. 10% of the taxable amount withdrawn D. $100
C
Under the misstatement of age provision in a health insurance policy, what can a company do if it discovers that an insured gave a wrong age at the time of application? A. cancel the policy B. increase premium C. adjust the benefit
C
Which non-forfeiture option provides the insured with the original amount of life insurance? A. cash surrender B. paid up insurance C. extended term
C
Which of the following accounts is portable? A. Health Reimbursement Account (HRA) B. Flexible Spending Account (FSA) C. Health Savings Account (HSA)
C
which of the following requires proof of insurability of policyowner as well as insured? A. return of premium B. waiver of premium C. payor benefit D. guaranteed insurability
C
All of the following statements concerning the Fair Credit Reporting Act are true except.. A. It relates to investigative reports on applicants for insurance B. The agent is required to obtain the applicants signature on appropriate disclosure forms C. It is state law enforced by all state insurance departments D. The law gives applicants the right to challenge the validity of information about themselves
C (federal, not state)
All of the following would be eligible to establish a Keogh retirement plan except A. a dentist in a private practice B. partners in a furniture store C. sole proprietor of a jewelry store D. major stockholder employee in a family corporation
D
Camille owns a health insurance policy that pays a benefit of $125/day for each day of hospitalization, regardless of the actual expenses she incurs. The amounts are paid directly to her. Camille has a A. limited risk policy B. Medicare Supplement Policy C. disability policy D. hospital income policy
D
D, 40, has no employer-sponsored retirement plan. He is married, his wife as at home tending to children. What is the max deductible contribution each of them can make to their IRA each year? A. $4k B. $3k C. $5250 D. $6k
D
Which of the following plans allows employees to elect to take a reduction in their current salaries by deferring amounts into a retirement plan A. IRA B. Keogh C. defined contribution D. 401(k)
D
Which of the following statements regarding Keogh (HR-10) plans is not correct? A. They must comply with the same participation & coverage requirements as qualified plans B. They apply to self-employed persons C. They may be funded by an individual retirement annuity D. Distributions before 59.5 are tax deductible
D
What type of retirement plan could Mary, a sole proprietor (non incorporated) put into place? _________ If she doesn't begin distribution by age ___________, the late withdrawal penalty will be ______% of ____________
HR-10/Keiogh; 72; 50; what she should have taken each year
The sharing of expenses between the insured and insurer is an example of ______
coinsurance
An insurer can keep a policy from being replaced through ______________
conservation
R has an individual disability policy. His June 1 premium hasn't been paid. He has a claim on July 29. What will the insurer do?
deny claim, cancel policy (way past grace period)
What clause (provision) identifies the components of the contract?
entire contract
Which section of the health insurance policy specifies the conditions, times and circumstances under which the insurance is not covered by the policy?
exclusions
T's life insurance policy will not pay death benefits until some future date. This is an example of...
executory contracts (executed in future only after something occurs/conditions met)
An intentional misrepresentation of a material fact made with intent to gain advantage is an example of __________
fraud
J wants his surviving kids to get equal shares of his life insurance when he dies. Which designation would accomplish this?
my children per capita