Northwestern Mutual - Life and Health Insurance

Which of the following is an eligibility requirement for all Social Security Disability Income benefits? A) Have attained fully insured status B) Be disabled for at least 1 year C) Have permanent kidney failure D) Be at least age 50

A) Have attained fully insured status - Only those who have attained fully insured status are eligible for Disability Income benefits. Contributing to Social Security for 40 quarters (10 years) attains fully insured status.

What do individuals use to transfer the risk of loss to a larger group? A) Insurance B) Insurable interest C) Exposure D) Indemnity

A) Insurance - Insurance is the mechanism whereby an insured is protected against loss by a specific future contingency or peril in return for the present payment of premium.

When does Medicare cover nursing home care? A) Medicare covers all nursing home care for eligible policyholders B) Only if it is part of treatment for a covered illness or injury C) Only if the deductible has been met D) Only for those age 80 and older

B) Only if it is part of treatment for a covered illness or injury - Medicare will not cover long-term care or nursing home care unless it is part of the treatment for a covered illness or injury.

Which of the following would help prevent a universal life policy from lapsing? A) Corridor of insurance B) Target premium C) Face amount D) Adjustable premium

B) Target premium - A recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT A) Mutual funds B) Value funds C) Fixed-income investments D) Money-market funds

B) Value funds - during the 30 free-look period, the premium for a variable annuity may only be invested in fixed-income investments and money-market funds, unless the investor specifically requests that the premiums be invested in the mutual funds

An insurance policy specifies that it will pay $600 for a specific loss. The policy owner suffers a loss of $535. How much will the policy pay? A) $300 B) $500 C) $535 D) $600

C) $535 - Applying the principle of indemnity, the insurer will pay the actual cost of the loss, up to the limit stated in the policy.

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? A) It decreases over the term of the policy B) It remains the same as the original policy, regardless of any differences in value C) It is reduced to the amount of what the cash value would buy as a single premium D) It is increased when extra premiums are paid

C) It is reduced to the amount of what the cash value would buy as a single premium

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT A) Payment of premium B) Delivery receipt C) Signed waiver of premium D) Statement of good health

C) Signed waiver of premium - policy doesn't go into effect until the premium has been collected. If the premium was not collected at the time of the app, the producer may also be required to get a Statement of Good Health from the applicant at the time of policy delivery.

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? A) Company is the owner, but the executive pays the premium B) Board of directors is the owner, and the board of directors pays the premium C) Company is the owner, and the company pays the premium D) Executive is the owner, and the executive pays the premium

D) Executive is the owner - exec buys the policy and pays the premium, and the employer reimburses the exec for the cost

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? A) Single life B) Fixed-amount C) Life income w/ period certain D) Joint and survivor

C) Life income w/ period certain - guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.