part 2

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits? a)Deferred interest annuity b)Immediate annuity c)Variable annuity d)Flexible payment annuity

B

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? a)Payments can be made in installments and as a single cash refund. b)It does not guarantee that the entire principal amount will be paid out. c)It is a life contingency option. d)The beneficiary receives the remainder of the principal amount upon the annuitant's death.

B

All of the following apply to short-term disability plans EXCEPT a)A benefit period of 26 weeks is most common for group plans. b)Both group and individual plans are renewable. c)Group plans can provide benefit periods of up to 52 weeks. d)Individual plans can provide benefit periods of up to 2 years.

B Short-term disability plans are not renewable.

#72. The advantage of qualified plans to employers is a)No lump-sum payments. b)Taxable contributions. c)Tax-deductible contributions. d)Tax-free earnings.

C

The term "fixed" in a fixed annuity refers to all of the following EXCEPT a)Equal annuity payments b)Amount and length of payments c)Death benefit d)Guaranteed rate of interest

C A fixed annuity is fixed in the sense that it provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next. The company also guarantees the specified dollar amount for each payment and the length of the payout period. Annuities do not provide a death benefit.

Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization? a)Provide medical services only from physicians in the network b)Provide the subscriber a choice of physicians c)Provide the subscriber a choice of hospitals d)Provide medical services at a reduced cost

A A Preferred Provider Organization attempts to provide subscribers with a choice of health care provider while effecting some cost-savings by contracting with providers for such services.

Which of the following is true regarding inpatient hospital care for HMO members? a)Care can be provided outside of the service area .b)Care can only be provided in the service area .c)Services for treatment of mental disorders are unlimited. d)Inpatient hospital care is not part of HMO services.

A The HMO provides the member with inpatient hospital care, in or out of the service area. The services may be limited for treatment of mental, emotional or nervous disorders, including alcohol or drug rehabilitation or treatment.

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a)The insurer may deny coverage later, because of the information missing on the application. b)The policy will be interpreted as if the insurer waived its right to have an answer on the application. c)The policy will be interpreted as if the insured did not have an answer to the question. d)The policy will be void.

B

Other than for a qualified life event, when can a change be made in benefits for a Flexible Spending Account (FSA)? a)No changes can be made once the policy is issued b)During the open enrollment period c)At any time as necessary d)Within 3 months of the cause of the change

B FSA benefits may be changed during open enrollment, unless the circumstances are deemed a Qualified Life Event.

L has a major medical policy with a $500 deductible and 80/20 coinsurance. L is hospitalized and sustains a $2,500 loss. What is the maximum amount that L will have to pay? a)$2,500 (the entire bill) b)$900 (deductible + 20% of the bill after the deductible [20% of $2,000]) c)$500 (amount of deductible) d)$1,000 (deductible + 20% of the entire bill)

B L would first pay the $500 deductible; out of the remaining $2,000, the insurer will pay 80% ($1,600) and the insured will pay 20% ($400).

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 The target premium is 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.

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend a)Joint and survivor. b)Straight life. c)Life income with period certain. d)Installment refund.

B With the straight life option, the annuity payments cease at death. However, because there are no other guarantees that might incur additional charges, this option provides the highest monthly benefits for an individual annuitant.

Which of the following statements is NOT correct concerning the COBRA Act of 1985? a)It applies only to employers with 20 or more employees that maintain group health insurance plans for employees. b)COBRA stands for Consolidated Omnibus Budget Reconciliation Act. c)It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. d)It covers terminated employees and/or their dependents for up to 36 months after a qualifying event.

C COBRA Act applies to only employers with 20 or more employees.

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? a)As of the first of the month after the policy issue b)As of the policy issue date c)As of the application date d)As of the policy delivery date

C If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of application.

Which of the following statements about a suicide clause in a life insurance policy is true? a)Suicide is covered as long as the policy is in force. b)Suicide is excluded as long as the policy is in force. c)Suicide is excluded for a specific period of years and covered thereafter. d)Suicide is covered for a specific period of years and excluded thereafter.

C In most states, if death results from suicide within a certain period, the insurer is not obligated to pay the death benefit.

In long-term care (LTC) policies, as the benefit period lengthens, the premium a)LTC premiums are not based on benefit periods. b)Decreases. c)Increases. d)Remains unchanged.

C LTC policies define the benefit period for how long coverage applies, after the elimination period. The longer the benefit period, the higher the premium will be.

A Medicare supplement plan must have at least which of the following renewal provisions? a)Nonrenewable b)Noncancellable c)Guaranteed renewable d)Conditionally renewable

C Medicare supplements must be at least guaranteed renewable.

Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within a)30 days. b)60 days. c)90 days. d)120 days.

C Most policies will pay the accidental death benefit as long as the death is caused by the accident and occurs within 90 days.

What characteristic makes whole life permanent protection?a)Guaranteed level premium b)Living benefits c)Coverage until death or age 100 d)Guaranteed death benefit

C Whole Life policies are referred to as permanent protection, since as long as the premium is paid coverage will continue for the life of the insured or till the insured's age 100.

Which of the following may NOT be included in an insurance company's advertisement? a)The policies' limitations or exclusions b)The name of a specific agent c)An identification of a limited policy as a limited policy d)That its policies are covered by a state Guaranty Association

D It is illegal for insurers to state that their policies are guaranteed by the existence of a Guaranty Association.

Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home? a)Accidental death b)Guaranteed insurability c)Payor benefit d)Long-term care

D Long-term care rider provides for the payment of part of the death benefit (called accelerated benefits) in order to take care of the insured's health care expenses, which are incurred in a nursing or convalescent home.

Which of the following settlement options in life insurance is known as straight life? a)Fixed amount b)Life income c)Single life d)Life with period certain

D Should a key person die, the benefit is treated as a reimbursement to the business for loss of services from that key person.

All of the following would be different between qualified and nonqualified retirement plans EXCEPT a)Taxation of withdrawals b)Taxation of contributions c)IRS approval requirements d)Taxation on accumulation

D Taxation on accumulation is deferred in both types of plans. The rest of the characteristics would differ.

Which of the following riders would NOT increase the premium for a policyowner? a)Payor benefit rider b)Waiver of premium rider c)Multiple indemnity rider d)Impairment rider

D The impairment rider excludes a specified condition from coverage, therefore, reducing benefits. An insurance company will not charge extra for a rider that reduces benefits.

In order to maintain coverage under COBRA, how soon from termination of employment must an employee exercise extension of benefits? a)7 days b)10 days c)30 days d)60 days

D Under COBRA, terminated employees must exercise extension of benefits within 60 days of separation from employment.