Oklahoma Life and Health State Exam Simulator

The __________ limits the time an insurer can void a contract or deny a claim for material misrepresentations on the application.

"Time Limit on Certain Defense" provision

The _______ means that unused funds not used in a Flexible Savings Account by the end of the plan year can be forfeited to the employer.

"Use it or Lose it" rule

The ___________ in an individual health insurance policy allows an insurer to pay benefits to the insured on a pro-rata basis when the insurer was not notified prior to the claim that the insured has other health coverage.

"insurance with other insurers" provision

Under the ___________ of total disability, the insured will be considered disabled if they are unable to perform the substantial and material duties of the insured's regular occupation.

"own-occupation" definition

Beth is a surgeon who has an own-occupation disability income policy. She was injured six months ago and has been unable to return to her practice. Her monthly benefit from the policy is $15,000. During this time, Beth has been working part-time at a local boutique and receives $2,000 monthly. What is her ongoing monthly benefit while she is unable to perform her surgical duties?

$15,000

A non-participating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value?

$16,000 was received tax-free and $4,000 as ordinary income

If an MEC is surrendered prior to age 59 1/2, the gain is taxable as well as a _________ imposed on that gain.

10% penalty

Mary is the sole proprietor of her business and has a family health plan. She would like to deduct the premiums from her taxes. What percentage of her premiums are tax deductible?

100%

What minimum percentage of all eligible employees must participate in a group life insurance plan if the premiums are completely paid for by the employer?

100%

If an MEC is surrendered prior to age _________, the gain is taxable as well as a 10% penalty imposed on that gain.

59 1/2

Most states allow insurers to delay payment of cash surrender values for up to______after policyowners request payment.

6 months

Qualified long-term care premiums are treated for tax purposes as tax-deductible to the extent they exceed _________ of an individual's AGI (Adjusted Gross Income).

7 1/2%

Which of the following describes coverage for the Medicare Part B coinsurance?

A Medicare Supplement core benefit

Which of the following would NOT be appropriate for an immediate annuity?

A parent saving for a child's college

Which of the following best describes a point-of-service (POS) plan?

A plan which combines indemnity plan features with those of an HMO

Qualified long-term care premiums are treated for tax purposes as tax-deductible to the extent they exceed 7 1/2% of an individual's _______

AGI (Adjusted Gross Income)

Which of the following statements accurately describes the "time limit on certain defenses"?

After a stated period of time, claims cannot be denied due to material misrepresentation on the application

The highest mortality rate belongs to which group?

Age 70 males

When a large sum of money is used to structure monthly payments, which product is typically used?

An immediate annuity

Which statement is INCORRECT concerning a tax-sheltered annuity (TSA)?

Annual investment gains are included in participant's gross income

Kevin has an existing life insurance policy and assigns it to another insurer for a new contract. How would this transaction be treated for tax purposes?

As a Section 1035 exchange

What is the tax treatment of benefit payments for a non-qualified annuity?

Benefit payments are always fully taxable

Who normally pays the premiums for group credit life insurance?

Borrower

A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy?

Business overhead expense

Which statement regarding the waiver of premium rider is accurate?

Cash payment is not directly provided to the policyowner

Which statement regarding universal life insurance is correct?

Cash value accumulations have a guaranteed minimum interest rate

A policyowner suffers a covered accident and health insurance loss on June 30 and submits the proof of loss to the insurer July 10. If the policyowner cancelled the coverage on July 2, how will the insurance company handle the claim?

Claim must be paid after proof of loss is received (In this situation, the insurer must pay the claim upon receipt of the proof of loss because the policy was still active on the date of the loss)

An accident and health insurance policy's premium requirements are set forth in which of the following provisions?

Consideration clause

Jill has a group health plan with an employer that covers employees in more than one state. Which of the following aspects is NOT affected by the state regulatory jurisdiction established for this plan?

Continuation of coverage under COBRA

COBRA is a Federal law that deals with ___________.

Continuation of group coverage

In what situation would disability income insurance premiums be a deductible expense?

Corporation paying for group disability income coverage for its employees

What does the rehabilitation benefit cover in a disability income policy?

Covers the approved cost of the rehabilitation necessary to help a disabled insured return to work

What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up?

Decreases

Which life insurance policy would be eligible to include an automatic premium loan provision?

Decreasing term

The investment gains are _________ in a tax-sheltered annuity.

Deferred

Which annuity allows contributions to an IRA?

Deferred

An individual, age 45, would like to help pay for his daughter's college expenses in 10 years. Which annuity would be appropriate for this individual?

Deferred annuity

__________ is not the underwriting responsibility of the life insurance agent

Determining the final rate classification

Health Maintenance Organization (HMO) wellness programs may include each of the following EXCEPT

Diagnostic testing services

________ are not included when calculating earned income for disability income insurance purposes.

Dividends

Which of the following health insurance provisions requires that the application becomes part of the policy?

Entire Contract clause

Long Term Care policies will usually pay for eligible benefits using which of the following methods?

Expense incurred

Which of these may NOT be deducted from premium payments or the cash value of a variable life insurance policy?

Federal premium taxes

Which of these is NOT considered a preventative service in a dental plan?

Fillings

Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted?

Fixed amount installment option

The "Use it or Lose it" rule applies to

Flexible Savings Accounts

Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection?

Fluctuate with changes in the cash account

Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within a limited time period after policy delivery?

Free-look period

How long does one premium payment cover in a single premium whole life policy?

Full life of the policy

A large corporation pension plan purchased an accumulation annuity contract where all of the participating employees received certificates of participation. What is this contract called?

Group deferred annuity

What is the name of the rider that provides an additional purchase option in a life insurance policy?

Guaranteed insurability rider

The initial cost of whole life insurance is actually _____ than an equivalent amount of term insurance

HIGHER

In order to contribute to a _________, the applicant must be enrolled in a High Deductible Health Plan (HDHP).

Health Savings Account (HSA)

A family counseling benefit is typically offered under which of these coverages?

Hospice care

Some standard Medicare Supplement policies include which benefit?

Hospice care

When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve?

Identifies the needs of an individual and the individual's dependents

A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?

If the interest rate falls below a specified level, the surrender charge is waived

What effect does interest income have upon insurance premiums?

Increases premium

The type of health insurance in which underwriting procedures are the most restrictive is

Individual

All of these are considered features of whole life insurance EXCEPT

Initial premium is lower than for an equivalent amount of term insurance

Who is protected with the "other insurance with this insurer" provision?

Insurance company

Which statement regarding whole life insurance is accurate?

Insurance coverage can continue for life

Which statement is INCORRECT about the interest-only settlement option in a life insurance policy?

Interest on proceeds must be paid by the beneficiary

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

Interest payments made by policyowner are deductible

When compared to a fixed annuity, a variable annuity has what distinguishing feature?

Investment risk is assumed by the purchaser

Which statement regarding the certificate of insurance is accurate?

It indicates evidence of an employee's insurance coverage

A life insurance beneficiary died after receiving only six payments under the policy's life income settlement option. What happens with the remaining balance of the death proceeds?

Kept by the insurance company

A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?

Less than the face amount

Which of these is NOT a common life insurance nonforfeiture option?

Life income annuity

What action can an insurer take to discourage malingering and false disability claims?

Limit the amount of benefits an insured can receive from two disability policies with the same insurer

Why do insurers require a minimum number of employees participate in a group insurance plan?

Minimize adverse selection

Respite Care coverage is typically found in a(n)

Long Term Care policy

Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense?

Long-term care benefit rider

What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual?

Management of proceeds would be provided

A ____________ can be attached to a deferred annuity that features fixed interest rate guarantees combined with an interest rate adjustment factor that can cause the actual crediting rates to increase or decrease in response to market. Market value adjustments found in some annuity products are meant to shift some of the investment risk to the policyowner.

Market Value Adjustment (MVA)

Bert's spouse passed away recently. Bert was covered under his spouse's group family health insurance plan but now is covered under COBRA. How much of the active-employee cost may be passed on to Bert for continued coverage?

Maximum of 102%

Skilled nursing facility expenses are sometimes covered by _____, but ONLY if the insured was hospitalized prior to entering the facility.

Medicare

A __________ policy helps pay for out-of-pocket expenses involved under a Medicare claim

Medicare Supplement

Medicare Part B excess charges are covered by

Medicare Supplemental insurance

Which individual would be best suited for Medicare Supplement insurance?

Medicare enrollee

What is considered a valid reason for an insurer's refusal to pay policy proceeds directly to a minor?

Minors are normally not capable of handling money in a reasonable manner

______________ band together several employers under state law for the purpose of obtaining group insurance at a more favorable rate.

Multiple employer trusts

The policyowner's interest payments are

NOT tax deductible

Which of these is NOT used as selection criteria in the underwriting process of a life insurance application?

National origin

__________ is a method of life insurance planning which identifies the needs of an individual and the individual's dependents.

Needs analysis

The disability income policy most likely to have been issued on a substandard basis is

Non-cancelable with a health condition exclusion rider

Jerome is covered by a disability income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this?

Non-occupational coverage

A life insurance company just paid a $100,000 death benefit to a beneficiary. When the insured died, the cash value was $15,000 and the total premiums-paid equaled $10,000. How much of the proceeds will be added to the beneficiary's gross income for federal income tax purposes?

Nothing

Which statement is true regarding hospital preadmission certification for emergency situations?

Notification is required to be given after insured is admitted to the hospital

Which statement is true regarding hospital preadmission certification for non-emergency situations?

Notification is required to be given before insured is admitted to the hospital

Long-term care policies normally cover expenses associated with

Nursing homes

Insurable interest involves what assumption?

One person benefits from another person's continued life

Julie is an employee with a group health plan that contains the Mandatory Second Surgical Opinion provision. What is to be expected with this provision in place?

Out-of-pocket expenses are lower when a second surgical opinion is obtained as opposed to having only one

Which statement best describes a single premium whole life policy?

Paid-up policy that offers lifetime protection

A policyowner suffers an injury that renders him incapable of performing one or more important job duties. Any decrease in income resulting from this injury would make him eligible for benefits under which provision?

Partial disability

________ is defined as any type of disability in which the worker is unable to perform at full physical capacity.

Partial disability

Which of the following is NOT true of participants in multiple-employer trusts?

Participants must purchase all coverages the trust offers

Which of the following is NOT a function of accident and health insurance?

Pays a death benefit as a result of natural causes

Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?

Point-of-service

Which of these statements accurately portrays an adjustable life insurance policy?

Policy can alternate between forms of term and whole life insurance

These are all accurate statements regarding universal life insurance EXCEPT

Policy loans are not permitted

Straight whole life insurance can be accurately described in all of these statements EXCEPT

Policy protection normally expires at age 65

What happens to a life insurance policy when the policy loan balance exceeds the cash value?

Policy will no longer be in force

Home health care benefits typically do NOT include coverage for

Prescription medication

When must a producer provide disclosure about information practices to an applicant?

Prior to or at the time of signing the application

Alan is an enrollee of a health maintenance organization (HMO) which uses a gatekeeper system. If there ever comes a time when he needs emergency health services, what should he do?

Proceed to the nearest emergency room

_____________ are treated for tax purposes as tax-deductible to the extent they exceed 7 1/2% of an individual's AGI (Adjusted Gross Income).

Qualified long-term care premiums

Omar is covered by a disability income policy. He is hurt while performing an occupation more hazardous than the occupation listed in his policy. The policy's change of occupation provision will have what effect?

Reduce the benefit level

What could be the potential result of taking out a cash value loan under a life insurance policy?

Reduces the amount receivable upon surrender of the contract

A life insurance policyowner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?

Reduction of premium payment option

Which of the following is NOT a basic underwriting action for accident and health insurance?

Removing uniform policy provisions

Which of the following would most likely purchase an immediate annuity?

Retiree having a lump sum to invest

What kind of arrangement gives the policyowner the right to change the beneficiary?

Revocable designation

__________ are allowed to deduct from their gross incomes 100% of the amount they pay for health insurance (including qualified long-term care insurance).

Self-employed persons

__________ are a percentage of weekly earnings up to to a stated maximum.

Short term group disability income benefits

Individuals who participate in an HMO plan are called

Subscribers

An insurer will typically assess a back-end load on a deferred annuity that is cancelled during the early contract years. What is this back-end load referred to as?

Surrender charge

Which of these annuity contract features is meant to discourage withdrawals and exchanges?

Surrender charges

The investment gains are deferred in a

Tax-Sheltered Annuity

Jonas is covered with disability insurance through his employer. The employer pays 75% of the premium, while Jonas pays the other 25%. What is Jonas' tax liability for any benefits paid from the disability plan?

Taxes must be paid on 75% of the benefits received

When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for

Ten year term insurance for a person aged 55

Which factor determines the maximum disability income benefit that can be purchased by an applicant?

The applicant's income

K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?

The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured

Which of the following is a true statement regarding a Medicare Supplement policy purchased during the open enrollment period?

The policy will be issued regardless of health

When disability buy-sell insurance benefits exceed a partner's cost basis, which of the following is correct?

The full amount is non-taxable to the partner

Peter, age 50, surrenders his modified endowment contract (MEC). How is the gain treated in terms of federal income taxes?

The gain is treated as taxable income and a penalty tax is imposed on the gain

What would be considered an advantage of purchasing term life insurance?

The initial premium is lower compared to an equivalent amount of whole life coverage

Which of these is a typical result of a concurrent review?

The length of time spent in the hospital is monitored

Which of the following statements about the installments for a fixed period settlement option in life insurance policies is NOT true?

The periodic payment amount is determined by the beneficiary's age

Under an adjustable life insurance policy, which of the following may NOT be changed without further underwriting?

The person insured

Taxable income may be the result from all of these modified endowment contract (MEC) transactions EXCEPT for

The policy is surrendered for less than what was paid into it

Which of these must be disclosed in a universal life policy?

The policy's surrender charges

An advantage of owning a flexible premium life insurance policy would be

The policyowner can make policy changes without difficulty

Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?

The premium to purchase the coverage comes from the policy's cash value

Which of these is NOT a reason to buy a term life policy?

To accumulate savings

What is the effect of the market value adjustment in a market value adjustment annuity?

Transfers some of the investment risk to the policyowner

How long does protection normally extend to under a limited pay whole life policy?

Until age 100

When does interest income for a flexible premium deferred annuity get reported for federal income taxes?

Upon receiving distributions from the contract

Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?

Variable universal life

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met

When would evidence of insurability be required for a person already covered with a variable universal life policy?

When the death benefit is increased

A policyowner is permitted to take out a policy loan on a whole life policy at what point?

When the policy has a cash value

After an applicant reads and signs an insurance application, he/she should be conscious of the fact that

a false statement could lead to loss of coverage

The coinsurance for skilled nursing facility services covered by Medicare after the 100% Medicare coverage ends is

a flat dollar amount per day

Short-term group disability income benefits are

a percentage of weekly earnings up to to a stated maximum

A life insurance policy provision that has the ability to reduce the death benefit is called the

accelerated (living) benefit

Disability income insurance normally excludes coverage for disabilities that arise from

active military duty

Under COBRA, no more than 102% of the __________ may be passed on to a surviving spouse for continued coverage.

active-employee cost

A Market Value Adjustment (MVA) can be attached to a deferred annuity that features fixed interest rate guarantees combined with an interest rate adjustment factor that can cause the ________ to increase or decrease in response to market.

actual crediting rates

A comprehensive long term care policy covers expenses for all of these EXCEPT

acute care.

An __________ in a life insurance policy is also known as a guaranteed insurability rider.

additional purchase option

An insured is covered under a group long-term disability policy. Under this type of policy, the definition of disability based on any occupation typically applies

after two years of disability

The absolute assignment of a life insurance policy results in

all incidents of ownership transferred to the assignee

A rating on a disability income insurance policy means that

an additional premium will be charged.

The exclusion ratio determines the amount of

an annuity payment subject to income tax.

The Delayed Payment provision is a proactive measure for companies should

an economic crisis arise, but such delays are rarely invoked

An immediate annuity is commonly used to structure payments coming from ______________.

an initial large sum

A ten year renewable term policy permits the policyowner to renew the same coverage for

another ten years at the end of the first ten-year term

When there is a named beneficiary on a life insurance policy, the death benefits

are paid directly to the beneficiary without interference from the insured's creditors

The completed application for insurance is the

basic source of insurability information

A noncancelable health policy may NOT

be changed in any way by the insurer up to a specified age, so long as the premiums are paid

A life insurance policy's waiver of premium rider has the ability to relieve the insured of premium payments following an initial waiting period after the insured _________

becomes totally disabled

In an own-occupation disability policy, the insurance company will consider your occupation to be the occupation you are engaged in at the time you become disabled. They will pay the claim even if you ________, as long as you continue to be disabled in your original occupation.

begin working in another career field

Under the life income settlement option, the ___________ is able to have the benefits converted into an annuity which is based upon the individual's life expectancy and payable as long as the beneficiary is still alive.

beneficiary

Under the life income settlement option, the beneficiary is able to have the benefits converted into an annuity which is based upon the individual's life expectancy and payable as long as the

beneficiary is still alive

An accident and health insurer has just received written proof of loss from one of its insureds. The insured must now wait 60 days before

bringing legal action against the insurer

Business overhead expense insurance covers ___________ when the insured business owner is disabled.

business expenses and payroll

The guarantee of insurability option provides a long-term care policyowner the ability to

buy additional coverage at a later date

A source of supplemental income for a life insurance policyowner can be derived from the

cash value

An automatic premium loan provision is possible in whole life insurance because of the ________ that builds.

cash value

When a life insurance policyowner obtains a policy loan, the collateral for the loan is the

cash value of the policy.

With a group deferred annuity, the employer holds the master contract and ________ are given to the persons covered by the plan.

certificates of participation

The principal source of information concerning an applicant's identity, age, and marital status is found in the

completed application

An annuity's accumulation period may

continue after the purchase payments stop

In an own-occupation disability policy, the insurance company will consider your occupation to be the occupation you are engaged in at the time you become disabled. They will pay the claim even if you begin working in another career field, as long as you _______________

continue to be disabled in your original occupation

Under COBRA, no more than 102% of the active-employee cost may be passed on to a surviving spouse for

continued coverage

The ________ allows an employee to change from group coverage to an individual life insurance policy.

conversion provision

Reductions in coverage are one feature of _______ in Health insurance policies.

cost containment

Any employee insured under a group life insurance plan is normally

covered with term life insurance

The borrower typically pays the premiums on any

credit life insurance policy

Under a fixed life annuity, the purchasing power_______when the cost of living goes up because the amount of benefit payments remains fixed

decreases

Capital liquidation creates a situation in which a sum of money

decreases in size

Once a policy's _______ has been met, the major medical policy will pay for the remaining cost of a covered loss.

deductible amount

A Market Value Adjustment (MVA) can be attached to a ___________ that features fixed interest rate guarantees combined with an interest rate adjustment factor that can cause the actual crediting rates to increase or decrease in response to market.

deferred annuity

Policy proceeds from ________ are normally received tax-free.

disability buy-sell insurance

Federal income taxes will apply to_____ received from a noncontributory plan.

disability proceeds

The reduction of premium payment option allows a policyowner to use the _________ to pay all or part of the next premium due on the policy.

dividend

Life insurance policies guarantee all of these except a ________

dividend scale

Group insurance policies are NOT written on an individual basis so an employee in poor health is

eligible for the same coverage as the other employees in the group.

If group life insurance premiums are completely paid for by the ______, the minimum percent of eligible employees required to be covered is 100%

employer

With a group deferred annuity, the _________ holds the master contract and certificates of participation are given to the persons covered by the plan.

employer

Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash value plus accumulated dividends

equal the net single premium for the same face amount at the insured's attained age

A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for

experimental and investigative services

The _______ provides coverage equal to the death benefit of the lapsed policy.

extended term nonforfeiture option

When an insured dies, proceeds of a life insurance policy paid as a lump-sum death benefit to a beneficiary are exempt from _____

federal income tax

A Market Value Adjustment (MVA) can be attached to a deferred annuity that features __________ combined with an interest rate adjustment factor that can cause the actual crediting rates to increase or decrease in response to market.

fixed interest rate guarantees

Major Medical policies are typically characterized by ________

flat deductibles

Setting up a college savings account for a young child would not be a suitable situation

for an immediate annuity

The "Use it or Lose it" rule means that unused funds not used in a Flexible Savings Account by the end of the plan year can be

forfeited to the employer

Self-employed persons are allowed to deduct from their __________ 100% of the amount they pay for health insurance (including qualified long-term care insurance).

gross incomes

With a __________, the employer holds the master contract and certificates of participation are given to the persons covered by the plan.

group deferred annuity

The certificate of insurance serves as evidence of an employee's coverage in a

group life plan

If the need for emergency health services arises for an enrollee of a ______ using a gatekeeper system, the enrollee should proceed directly to the nearest emergency room.

health maintenance organization (HMO)

The premiums for the renewal period will be

higher than the initial period

Needs analysis is a method of life insurance planning which _______ of an individual and the individual's dependents.

identifies the needs

An annuity which starts paying monthly benefits within a approximately one month after issuance is called a(n)

immediate annuity

Point-of-service plans allow insureds to obtain health services outside the network

in exchange for paying higher out-of-pocket costs.

Cash value accumulations are subject to a minimum interest guarantee

in universal life insurance.

A Market Value Adjustment (MVA) can be attached to a deferred annuity that features fixed interest rate guarantees combined with an interest rate adjustment factor that can cause the actual crediting rates to __________ in response to market.

increase or decrease

Under a fixed life annuity, the purchasing power_______when the cost of living goes down.

increases

Underwriting procedures are likely to be most restrictive for

individual health plans

Under the life income settlement option, the beneficiary is able to have the benefits converted into an annuity which is based upon the __________ and payable as long as the beneficiary is still alive.

individual's life expectancy

The ______ of whole life insurance is actually HIGHER than an equivalent amount of term insurance.

initial cost

A life insurance policy's waiver of premium rider has the ability to relieve the insured of premium payments following an __________ after the insured becomes totally disabled

initial waiting period

Business overhead expense insurance covers business expenses and payroll when the

insured business owner is disabled

If all beneficiaries die before the insured dies, the proceeds of a life insurance policy will be paid to the

insured's estate.

When premiums are determined, one factor would be the expenses of the

insurer

Interest on proceeds is paid by the ____________. The beneficiary must pay TAXES on any interest paid on the proceeds in an interest-only settlement option.

insurer to the beneficiary

In an accident & health policy, the ______ states the amount of benefits to be paid.

insuring clause

A Market Value Adjustment (MVA) can be attached to a deferred annuity that features fixed interest rate guarantees combined with an __________ that can cause the actual crediting rates to increase or decrease in response to market.

interest rate adjustment factor

The portion of the annuity payment that represents _________ is taxable. The portion that represents the return of principal is not taxed.

interest-earned

Interest on proceeds is paid by the insurer to the beneficiary. The beneficiary must pay TAXES on any interest paid on the proceeds in an

interest-only settlement option

The ____________ are deferred in a tax-sheltered annuity.

investment gains

Market value adjustments found in some annuity products are meant to shift some of the __________ to the policyowner.

investment risk

The insurance coverage in a variable life insurance policy may vary based on the value of

its underlying investments

During the early years of a whole life insurance policy, the cash value will normally be

less than the total premiums paid

After the extended term life non-forfeiture option is chosen, the available insurance will be

level term for a stated period of time

Group life insurance is typically issued as

level term insurance

Under the ____________, the beneficiary is able to have the benefits converted into an annuity which is based upon the individual's life expectancy and payable as long as the beneficiary is still alive.

life income settlement option

Payment of death benefits from natural causes is a function of _____, not accident and health insurance.

life insurance

In the event a policy loan balance exceeds a ______, the policy will no longer be in force

life insurance policy's cash value

Inpatient psychiatric care is covered under Part A Medicare for 190 days per

lifetime

To discourage malingering and false claims for disability, an insurer sets ______ an insured can collect from two disability policies with the same insurer.

limits on the amount of benefits

Most _______ provide benefits under an "own occupation" clause for the first two years of disability, and thereafter, provide benefits under an "any occupation" clause.

long term disability group policies

Most _________ pay on a reimbursement (or expense-incurred) basis, up to the policy limits

long-term care policies

Home health care covers

long-term physical therapy or nursing services provided at the insured's residence.

To discourage ___________, an insurer sets limits on the amount of benefits an insured can collect from two disability policies with the same insurer.

malingering and false claims for disability

With a group deferred annuity, the employer holds the ______ and certificates of participation are given to the persons covered by the plan.

master contract

Field underwriting by a producer

may result in the disclosure of hazardous activities of the applicant

Under an individual health policy, periodic health claim payments MUST be made at least

monthly

Multiple employer trusts band together several employers under state law for the purpose of obtaining group insurance at a

more favorable rate.

If an individual covered under a disability income policy is injured while engaged in an occupation that is _________ than the occupation stated in the policy, the result will be the benefit level is reduced.

more hazardous

The POS plan is based on a managed care foundation—lower medical costs in exchange for .

more limited choice

A point-of-service-plan allows an insured to choose either a _______ at the time care is needed.

network or an out-of-network provider

IRA funds that have been annuitized .

no longer permit contributions

Penalty taxes (10%) on premature distributions prior to age 59 1/2 from a modified endowment contract (MEC)

normally apply to policy loans

An insured is covered with a health insurance policy. If the insured would like to cancel the policy, he/she must

notify the insurance company in writing

In an own-occupation disability policy, the insurance company will consider your occupation to be the ___________ at the time you become disabled. They will pay the claim even if you begin working in another career field, as long as you continue to be disabled in your original occupation.

occupation you are engaged in

The amount of credit life insurance applied for is based

on the outstanding loan balance amount.

The "other insurance with this insurer" provision allows the insurer to control ___________ through its own policies.

overinsurance

In an ___________, the insurance company will consider your occupation to be the occupation you are engaged in at the time you become disabled. They will pay the claim even if you begin working in another career field, as long as you continue to be disabled in your original occupation.

own-occupation disability policy

The reduction of premium payment option allows a policyowner to use the dividend to ___________ due on the policy.

pay all or part of the next premium

Immediate annuities are often purchased by

people who have a lump sum to invest at retirement.

Mark is covered by a policy that uses the regular occupation (own-occ) definition of total disability. Using this definition, he will be considered disabled if unable to

perform the substantial and material duties of his regular occupation

Under a long-term care inflation rider, the benefit levels

periodically decrease without proof of insurability

A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to

periodically purchase additional insurance

A __________ can be obtained from a whole life insurance policy once it has accrued cash value.

policy loan

The standard provisions of an accident and health insurance policy require that the

policy, endorsements, and attached papers constitute the "entire contract"

Market value adjustments found in some annuity products are meant to shift some of the investment risk to the __________

policyowner

The fixed amount installment option pays a __________ until the proceeds and any interest earned are exhausted.

predetermined amount of income at specific intervals

The Consideration clause sets forth an accident and health insurance policy's

premium requirements

The "insurance with other insurers" provision in an individual health insurance policy allows an insurer to pay benefits to the insured on a ________ basis when the insurer was not notified prior to the claim that the insured has other health coverage.

pro-rata

When an insured dies, ____________ to a beneficiary are exempt from federal income tax.

proceeds of a life insurance policy paid as a lump-sum death benefit

The _________ is responsible for providing the insurance applicant with privacy notices.

producer

Under a key person disability income policy, benefits will be received as

tax-free income to the business

The coverage provided by a disability income policy that does not _________________________ is called non-occupational coverage

provide benefits for losses occurring as the result of the insured's employment

A _______ in the phase may be used to fund an IRA and allow continued contributions within the maximum limits set by the IRS

qualified deferred annuity

Most long-term care policies pay on a ________________, up to the policy limits.

reimbursement (or expense-incurred) basis

A life insurance policy's waiver of premium rider has the ability to

relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled

The portion of the annuity payment that represents interest-earned is taxable. The portion that ____________ is not taxed.

represents the return of principal

Because of the transfer of investment risk from the insurer to the policyowner, variable insurance products are considered

securities contracts as well as insurance contracts

The coinsurance for _________ covered by Medicare after the 100% Medicare coverage ends is a flat dollar amount per day.

skilled nursing facility services

The cash value is the amount payable to the policyowner when a whole life insurance policy is

surrendered before maturity

Benefits are received by the business tax-free because the premium paid is not

tax-deductible

Qualified long-term care premiums are treated for tax purposes as

tax-deductible to the extent they exceed 7 1/2% AGI

If an MEC is surrendered prior to age 59 1/2, the gain is ______ as well as a 10% penalty imposed on that gain.

taxable

The interest paid during an annuity's payout period is considered

taxable as ordinary income

Interest on proceeds is paid by the insurer to the beneficiary. The beneficiary must pay ________ paid on the proceeds in an interest-only settlement option.

taxes on any interest

When a disability income insurance policy covers disability arising out of a work-related illness or injury,

the amount of disability income payments for an on-the-job injury may be reduced by benefits paid under workers compensation

If an insurer pays an individual accident and health insurance claim during a policy's grace period,

the amount of unpaid premium may be subtracted from the reimbursement

In order to contribute to a Health Savings Account (HSA),

the applicant must be enrolled in a High Deductible Health Plan (HDHP)

Medicare Part A does NOT provide coverage for

the first 3 pints of blood

The insured's consideration given for a health insurance policy is

the first premium payment and the application

James is covered with health insurance by two different insurers. The "insurance with other insurers" provision in an individual health insurance policy allows an insurer to pay benefits to the insured on a pro-rata basis when

the insurer was not notified prior to the claim that the insured has other health coverage

If life insurance policy dividends are left with the insurance company,

the policy may be paid up when the cash value plus accumulated dividends equal the net single premium for the same face amount at the insured's attained age

The fixed amount installment option pays a predetermined amount of income at specific intervals until

the proceeds and any interest earned are exhausted

Under HIPAA requirements, eligibility for the pre-existing conditions exclusion waiver under new coverage is lost if

there is a break in coverage of more than 63 days

The reason for backdating a policy is

to obtain a premium rate based on an earlier age

Under the "own-occupation" definition of _________, the insured will be considered disabled if they are unable to perform the substantial and material duties of the insured's regular occupation.

total disability

Because of the __________ from the insurer to the policyowner, variable insurance products are considered securities contracts as well as insurance contracts.

transfer of investment risk

Typically, states will permit the grouping of two or more small employers in the same industry for obtaining group health insurance at a favorable rate. This grouping of employers is known as a multiple employer

trust

To discourage malingering and false claims for disability, an insurer sets limits on the amount of benefits an insured can collect from __________________.

two disability policies with the same insurer

Under the "own-occupation" definition of total disability, the insured will be considered disabled if they are unable to perform the substantial and material duties of the insured's regular occupation.

unable to perform the substantial and material duties

Fee-for-service (FFS) is a payment model where services are _______ according to a schedule laid out in the policy

unbundled and paid for separately

When a variable universal life policyowner selects a ______, the death benefit generally will fluctuate with changes in the cash account.

variable death benefit option

Because of the transfer of investment risk from the insurer to the policyowner, _________ are considered securities contracts as well as insurance contracts.

variable insurance products

An insurance policy that can also be classified as a securities product is called

variable life

The original policyowner who sells his life policy to a third party for a reduced face amount is known as the ______ in a viatical settlement.

viator

An automatic premium loan provision is possible in _________ because of the cash value that builds.

whole life insurance

A policy loan can be obtained from a ___________ once it has accrued cash value.

whole life insurance policy

The conversion option for group term insurance may be exercised by an employee

within 31 days of terminated employment